Morrow: Labor’s budget pits Canberra ticket-clippers against ordinary Australians

If Labor really cared about bracket creep, they would move to index tax brackets for inflation as they do in a host of other countries including the US, writes James Morrow.

Sometimes, if you want to understand a government’s priorities, you have to look at what they choose not to spend money on.

So consider for a moment the implications of Treasurer Jim Chalmers’ latest but by no means greatest budget.
Since the start of the year Labor has sprayed more than $60 billion in promises around the country to shore up marginal seats with “announceables” on everything from road upgrades to student loan forgiveness.

Yet at a moment when the world is looking more uncertain and dangerous than ever, the best Labor could do for Defence was to bring forward an extra $1 billion in spending.

At least if the People’s Liberation Army ever does decide to invade, they’ll have an awfully nice Bruce Highway to take them down through Queensland.

Australia will have to increase defence spending far further than Labor has budgeted. Picture: Colin Murty-Pool/Getty Images

Even with pledges of extra $50 billon for defence into the next decade, the portfolio will still sit at around 2.3 per cent of GDP, well short of what the times – to say nothing of the Trump administration – demand.

About the only thing certain to grow if Labor gets to legislate its promises is the size of government and its reach into Australians’ pockets.

Total tax revenue is expected to grow by more than 4.5 per cent per year through the rest of the decade.

Australian taxpayers will only get a pittance back.

The size of government as a percentage of GDP is also on the way up.

From 2010 to 2019, the year before Covid, the size of government as a percentage of GDP grew marginally, from 23.6 to 24.1 per cent.

During Covid, it flew past 26 per cent, with the expectation that it would retreat once the emergency had passed.

Yet next year government is expected to grow past 28 per cent of the economy, and stay there pretty much forever, reflecting Labor’s preferred economic model that churns taxpayer funds through Canberra for bureaucrats to clip the ticket and hand back what remains like it’s a gift.

This attitude – it’s our money first – could be seen when Treasury distributed its spin documents Tuesday.

Its handout on tax cuts re-claimed credit for its earlier revision of the Coalition’s old Stage 3 tax cuts, and then tried to conflate those cuts with the maybe $10 a week taxpayers will get from the Treasurer’s minuscule effort to address bracket creep.

Of course, if Labor really cared about bracket creep – which sees Australians punished for wage rises that move them higher up the tax ladder – they would move to index tax brackets for inflation as they do in a host of other countries including the US.

It remains to be seen how Opposition Leader Peter Dutton responds Thursday night when he delivers his Budget-in-Reply speech.

For the past two weeks or so there has been a sense that the Coalition has been drifting when it comes to policy, with critics both inside and out of the party room wondering if Dutton, after coming within striking distance of Labor’s first term government, had suddenly lost his nerve and pulled up short.

Tuesday’s Budget now allows Dutton the chance to reset.

To put it simply, the Treasurer has gifted him an unrepeatable opportunity to offer up a real alternative to a government that thinks it is doing you a favour by filching your watch and offering to tell you the time.