Madame Gillard's "John"

No dragons live in PM's perilous fiscal fantasy

Miranda Devine 
The Daily Telegraph 
May 01, 2013 12:00AM

'IMAGINE a wage earner, John, employed in the same job throughout the last 20 years.

"For a period in 2003 to 2007 every year his employer gave him a sizeable bonus. He was grateful but in his bones knew it wouldn't last. The bonuses did stop and John was told his income would rise by around five per cent each year over the years to come. That's the basis for his financial plans.

"Now, very late, John has been told he won't get those promised increases for the next few years but his income will get back up after that to where he was promised it would be. What is John's rational reaction?"

This was Julia Gillard's patronising attempt to explain her government's latest budget crisis. In a speech this week the Prime Minister used "John" to explain why it's the fault of everyone but her feckless spendthrift government that there will be a $12 billion revenue shortfall in the year she promised a surplus.

"John" appears to be the human embodiment of her government, two weeks before Wayne Swan hands down his fifth Budget, complete with its fifth deficit.

In the real world, a man who found his income reduced would tighten his belt. His family would look at the household budget and figure out what luxuries to give up.

Lamb might be off the menu, for instance, as would the Foxtel subscription, and the HCF membership. The holiday overseas might become a trip to the Forster caravan park. Private schools would have to wait until Year 11.

This is the sort of thrift Australian families have practised as a prudent response to global economic uncertainty, job insecurity, and a mercurial government, with household savings tripling in two years.

But the Prime Minister scoffs at such parsimony.

In "John's world" - that arcadia of protected jobs, plenty of cash and government benefits that flow like water, when John's income is cut, he doesn't curb spending.

Eat two-minute noodles for dinner? Take his kids out of private school?Perish the thought, says the PM.

He borrows money to keep his "family and lifestyle intact" because tomorrow is always another day of free money.

You can only understand John's behaviour if, like everyone in government, the public service, academia and a good deal of the media, he has a protected job sheltered from the disciplines of the market.

In the real world, mistakes have consequences, dad loses his job, incomes fall, people can't pay their mortgages, kids are pulled out of private school and belts are tightened by necessity.

The division in Australian society exploited by Gillard and Swan is not between left and right, haves and have-nots or even insiders and outsiders.

It's between those who have protected incomes and those who are exposed to the real economy - the small business owners who create wealth, the PAYE employees who work for the wealth creators.

In John's world, an 18-year-old working as a "glassie" on Anzac Day in a Balmain pub earns $550 for 11-hours work, because his employer is obliged to pay double time and three quarters under the Fair Work Act.

The result is that youth unemployment has skyrocketed to an average of 18 per cent and students can't find casual jobs once taken for granted by their parents. Only pizza delivery and off-the-books labouring is immune from the new harsh economic realities.

In the real world, bustling suburban high streets have become ghost towns on Sundays because shop and restaurant owners can't afford to pay penalty rates.

In John's world this is a "fair go" for workers.

The ABC lives in John's world, which is why it received an extra $10 million this year and reflexively spruiks for the federal government.

Take, for example, Four Corners' belated discovery of more than 1000 asylum seeker children in detention, after five years of see-no-evil journalism.

During the Howard era it couldn't focus enough on detention centres. But apart from once in 2011, it hadn't touched the subject since 2008 when it featured the reminiscences of detention centre guards in the Howard era, starring special guest villain Philip Ruddock, who had not been immigration minister for five years.

Meanwhile, the actual Rudd government was dismantling border protection policies, with the result that a trickle of two boats per month has exploded to more than 2000 people a month - and hundreds of asylum seekers have drowned. The cost to the taxpayer is more than $2.2 billion a year.

In John's world, this is a good policy. In John's world, $6 billion thrown at schools to please militant teacher unions will fix our children's declining performance in reading and maths, when evidence around the world shows little correlation between money and educational outcomes.

In John's world, the financial woes of the federal government are the fault of John Howard and Peter Costello.

In the real world, Howard and Costello inherited a budget in deficit in 1996 and left $22 billion in surplus in 2007, plus a $60 billion future fund.

Spending has blown out by 35 per cent a year since Labor came to office. Eighty cents in every dollar of income tax goes to social welfare and the government keeps promising to spend more.

Only in John's world is this sort of profligacy sustainable.

In the real world it is the road to ruin.