In a move destined to further knock Canberra retail and services, yesterday’s Mid Year Economic and Fiscal Outlook (MYEFO) Treasurer Scott Morrison the usual belting for the Federal Public Service that has been typical of the last five years.
 

National institutions such as the National Gallery of Australia and the National Portrait Gallery are being forced into a three per cent ‘efficiency dividend’ (read: cut) that will be piled on top of successive hits to their budgets over the last few years. In fact, for this year, the arts are copping proportionately large hits across the board.

Image: Australian Financial Review

Once thing lurking in the background is that MYEFO includes a large amount of savings that are still blocked in The Senate. It’s a bit clever by half to keep these savings on the books, especially given there hasn’t been any real interest from the cross-benchers in passing some of the large and unpopular measures.

At the end of the day, MYEFO is essentially the ideology established by Tony Abbott and Joe Hockey. It would seem their replacements are keeping most of the previous policies (cuts to health, education and welfare) while staying away from reform and the two big targets: superannuation and negative gearing. It’s all they can do to keep the troops happy and maintain support of the backbenchers for another 12 months.

Structural reform looks like a 2016 issue – if in fact we are ever going to get to that point. The problem will be the looming election. The timing means that there are large risks for putting forward necessary-though-unpopular policies into the 2016-17 budget. There is a huge need to either a) cut spending or b) increase taxes in order to balance the books.

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(Canberra Centre image via Benmax Group)