Federal Budget 2017: Calculated to blunt Opposition attack

EDITORIAL: The Federal Budget is politically astute, and can almost be viewed as a document that was prepared by drawing up a list of every line of Opposition attack.

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A LONG-held maxim is that politically successful budgets are those that tend to disappear from the public eye in the space of a few days.

But Prime Minister Malcolm Turnbull must be hoping the blueprint for 2017-18 unveiled by Treasurer Scott Morrison will break that mould, as it is clearly crafted to appeal to the psyche of a nation that is feeling more than a shade disillusioned and anxious in a rapidly changing world.

While it taxes and spends big, the changes are clearly targeted at addressing key community concerns and to blunt the political attacks of Labor.

At its very core the Budget recognises that many Australians – despite headline statistics about household wealth and GDP growth – have been doing it tough, especially in the aftermath of the mining investment boom. And in a complete about-face from the deep cuts the Abbott government tried to inflict, Mr Morrison has aimed his second Budget squarely and unashamedly at these middle Australians.

Previously lost pension concessions have been restored, Medicare has been ringfenced and indexation of bulk billing restored, education funding boosted, housing affordability has been addressed along with job security and energy prices.

These hot-button issues tick all the boxes as areas of most significant voter concern.

Mr Morrison is also, importantly, not just throwing cash at problem areas, but trying to address some of the structural issues at play. With housing affordability for example, the aim is to encourage increased supply, boost low-income housing, remove some of the pressures – real and perceived – associated with foreign investment in residential property, and enhance first homebuyers’ capacity to save for a deposit rather than extending yet another demand side subsidy.

Politically, the Budget is astute, and can almost be viewed as a document that was prepared by drawing up a list of every line of Opposition attack, from health care to foreign workers and infrastructure spending, and then coming up with a way to neutralise it. And with those attacks blunted, Mr Turnbull – with due recognition for the efforts of Barnaby Joyce and the Nationals (who have been pushing for real funding for the likes of the inland rail link for years) – has the opportunity to take ownership of all the “good news, nation-building” elements that have been funded.

Many fiscal conservatives will despair at the Government’s reliance on a raft of tax increases to underwrite the spending binge and maintain its predicted path to a surplus in a few years time (weather, global shocks and notoriously optimistic Treasury forecasts permitting). But the tax moves are cleverly targeted. Few voters, for example, would shed a tear about milking the big banks for an extra $6.2 billion, or levying companies that import foreign labour and using that money for skills training in Australia.

What these changes are not, however, is a substitute for underlying structural reform in areas such as taxation, welfare and federal-state financial relations – that builds a more sustainable long-term ­fiscal base.

While winnowing out, for accounting purposes, good debt from bad debt may garner voter support for borrowing for economic investment in infrastructure, this Budget does not alter the fact that, regardless of what you call it, that debt is still on our balance sheet and expected to grow to (net) $375 billion by 2019.

That there is an increasing focus on how we spend every dollar is welcome, as is news of the $8.4 billion commitment to the inland freight line linking Brisbane to Melbourne.

It is disappointing though that the Government has failed to address funding for Brisbane’s Cross River Rail link, one of the most critically needed projects in Australia right now.

It would be hoped this oversight, with a renewed appetite for reform underwritten by a Budget that should strike most of the right political chords with middle Australia, will be addressed as the polls improve and this Government has the air to be more courageous.