NEWSFLASH! In September I will join The Conversation as its Business and Economy Editor. I have been honoured to work at The Age for the past ten years, originally alongside the legendry Tim Colebatch, and for the past four years as economics editor in my own right.

At The Conversation, my job will be to make the best thinking from Australia's 40 univerisites accessible to the widest possible audience. That means you. From the new year I will also write a weekly column.

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I'll continue to post great things from The Conversation and other places here, and also on Twitter and Facebook. Enjoy.

Tuesday, February 14, 2017

Memo Scott Morrison: there ain't no jam jars

What's this about a "locked box"? Treasurer Scott Morrison says the savings that'll be made from cutting unemployment and other benefits will be put into the modern-day equivalent of a jam jar - "a locked box for which the Social Services Minister has full visibility and accountability to ensure that the money that will come from making these changes will go to ensure that the National Disability Insurance Scheme continues to be funded".

It came across as a threat: if the Senate didn't support the $3 billion of spending cuts in the clumsily named Omnibus Savings and Child Care Reform Bill, the National Disability Insurance Scheme mightn't be properly funded.

In reality there are no locked boxes. Clause 81 of the Constitution says "all revenues or moneys raised or received by the executive government of the Commonwealth shall form one consolidated revenue fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution".

There are no separate jam jars.

But it hasn't stopped the governments of all persuasion from acting as if there are. The best-known is the Medicare levy, which we are told funds Medicare and the National Disability Insurance Scheme, but which in reality goes straight into consolidated revenue (and couldn't anywhere near fully fund them in any event).

Some of them are silly. In his 2014 budget Joe Hockey promised the increase in the fuel excise would be ploughed back into roads. Not fuel excise itself, just the proposed increase, which was so tiny compared to total road funding that it would have been possible to say it had been ploughed back into roads, even if total road spending was cut.

And shortly after the lunchtime press conference it was conceded in question time that the threat had no force. Social Services Minister Christian Porter said that regardless of what goes into the 'locked box' the funding gap for the disability Insurance Scheme "will be met".

It was his "very strong preference" that it be met by finding savings.

But those savings needn't come from lifting the age of eligibility for the Newstart unemployment benefit from 22 to 25, they needn't come from lengthening the waiting period, and they needn't come from cutting it. It's possible to find other savings. If asked, the Senate crossbench would be happy to come up with suggestions.

In The Age and Sydney Morning Herald