Budget Forum 2018: A Political Budget Unlikely to Work Politically

The annual Budget has become increasingly political over the years, but the Budget to be delivered next week will be the “mother” of all political Budgets.

With Turnbull having “lost” 31 Newspolls, and the Abbott/Turnbull Governments over 60, and with the prospect of an election later this year, even perhaps as early as August/September, many in the Government see this as their last chance to turn things around, to shift voter sentiment in their favour.

Clearly, the Government is feeling much better about its budgetary situation and prospects, with the recent, unexpected (but probably unsustainable), boost to tax revenues, and what they are claiming to be “our stronger economy” and improving global economic prospects.

In recent weeks, the media has been reflecting this “newfound confidence” with front-page depictions of Treasurer Morrison as Santa Claus.

While Morrison has since attempted to play this down, a little, he and others have been promising sizeable personal tax cuts – indeed, he has also referred to a longer-term commitment, to hand back future Budget surpluses as additional and continuing tax cuts, “freezing” tax as a percentage of GDP.

There is also the usual speculation, initiated by the usual vested interest suspects, about likely spending increases, including in some welfare payments, and importantly even more infrastructure projects.

Someone has been sitting in government with a “checklist” of key voter groups, attempting to place a tick against as many as possible.

Don’t expect much “real policy”, nor much longer-term strategic thinking, that accurately reflects the magnitude and urgency of many major policy challenges, with our ageing population, inadequate and failing economic and social infrastructure, and most risky and unpredictable global economic and geo-political environment.

These will be either just kicked further down the road, for our kids to worry about and deal with, or simply ignored.

As has unfortunately become “usual”, the prospect of a Budget surplus still some years from now, will be again reaffirmed, but only “assumed”, with suggestions of even stronger growth and employment, some pick up in inflation, and probably, again, an unachievable improvement in wages.

Ironically, rather than join an “auction” on personal tax cuts etc., although they will claim to have “more to spend”, the Shorten Opposition may seek to present themselves as more “fiscally responsible and conservative” than the Turnbull Government, promising a somewhat “better bottom line”.

Don’t expect any real recognition or “analysis”, from either side, of all the very substantial expenditure commitments/promises stretching through the 2020s, and beyond (made by both sides), in education and health, defence, infrastructure and the NDIS all, despite their claims, are still “unfunded”, not to mention the growing need to service and ultimately repay our mounting debt, especially if future surpluses are to be committed to further tax cuts.

“Surreal”? Of course it is! The inherent assumption of such a political strategy is that voters are basically “dumb”, and can be “swayed”, even “bought”.

But, they are not. Moreover, any tax cuts will probably be easily dismissed as merely a “hamburger and a milkshake”, even if they are a whole “Big Mac Meal”, especially as households, carrying excessive debt, and with constrained savings, battle day-in-day-out with the ever mounting costs of living, from which this Budget is not likely to offer any significant relief.

As Xenophon found out recently, “sound bites” and “stunts”, and populism generally, have a very limited life. Voters want Turnbull and his opposition to “govern’’, to “solve problems”, to think and operate “strategically” in our longer-term national interests, and with honesty and integrity.

Don’t hold your breath.

First published at the Southern Highlands News on Thursday 3 May 2018.

 

More from our Budget Forum 2018 series:

Budget Forum 2018: This is not a Genuine or Equitable Way to Simplify the Personal Income Tax System by Andrew Podger

Budget Forum 2018: A Missed Opportunity for Enhancing Australia’s Budget Transparency on Distributional Information by Teck Chi Wong

Budget Forum 2018: Targeting the Black Economy by Joel Emery

Budget Forum 2018: Tax Caps and Tax Cuts: Good for Australia? by Miranda Stewart

Budget Forum 2018: Risks Greater Than I Can Recall in My Working Life by John Hewson

Budget Forum 2018: Should Australia Produce a Citizen’s Climate Budget? by Usman W Chohan

Budget Forum 2018: The Future of Corporate Taxation by David Ingles

Budget Forum 2018: Cuts to Personal Income Tax – A Mixed Bag by Robert Breunig

Budget Forum 2018: The Government Could Be Boosting the Budget Bottom Line with a Change to How It Taxes Gas by Diane Kraal