Sunday, 6 May 2012

Money Down the Drain

The Opposition has rather missed the point today with its response to the SchoolKids Bonus policy, set to appear in Tuesday's budget.  Under the means-tested proposal, parents will receive $410 from the government for every primary school student and $820 for every teenager in high school. Shadow Treasurer Joe Hockey sought to link the policy to public dissatisfaction with the carbon tax:

"This has got nothing to do with education and everything to do with a carbon tax and the fact that people are about to be hit with a great big whack on their cost of living expenses," he told ABC TV on Sunday.
"The Labor Party is panicking about the impact of the carbon tax on everyday Australians and they are trying to give people a sugar hit with an upfront payment."

Mr. Hockey is not necessarily incorrect.  This policy is a transparent bribe, designed to pump some life into the government's ailing poll numbers.  But instead of seeking to link this proposal to the carbon tax, the Liberals should have been highlighting the remarkable fiscal irresponsibility of the policy, particularly within the context of an allegedly tough budget.

The SchoolKids Bonus, which will replace a Howard-era tax refund, is nominally designed to assist parents with education costs.  But the money is not targeted, nor is it conditional - the government will essentially just be sending a blank cheque to hundreds of thousands of households.

Consider, as an example, a relatively poor family in Sydney's western suburbs, with two children at high school and one in primary education.  This family would receive $2,050 from the government under Julia Gillard's proposal.  Does the Prime Minister really imagine that every cent will be spent on education costs?

Of course not.  The government has no idea how this money will be spent.  It could pay for the groceries, or new rims for the car, or even a few six packs, and Wayne Swan would be none the wiser.  There are surely many better, more targeted ways to assist parents with the costs of education.

This is yet another example of the sort of egregiously undisciplined fiscal policy that we have come to expect from this government.  The Treasurer will no doubt project a surplus on Tuesday, using all manner of financial trickery.  But if not for schemes such as this one, that surplus could have been real.

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