Federal budget 2022: James Morrow analysis

ANALYSIS: Despite showing Australia in a strong fiscal position the 2022 federal budget fails to tackle the harder questions, writes James Morrow.

Did economic reform die of Covid, or with Covid?

When the pandemic hit, Treasurer Josh Frydenberg quite rightly pumped money into the economy to prevent what could have been an apocalypse of double-digit unemployment and long term structural scarring.

He may have gone overboard in some areas but the relative performance of Australia in terms of employment and GDP growth shows we more or less hit the mark.

The problem is that having turned on the taps to get Australians through Covid, no one seems to have much interest in turning them off again.

Government payments as a percentage of GDP may be down from their pandemic high of nearly 32 per cent but dive into the detail in the budget papers and there is no prospect of them falling to pre-Covid levels in the next ten years, and possibly never.

Treasurer Josh Frydenberg prepares to deliver the 2022 federal budget. Photo: Rohan Thomson

To be fair to the government, the NDIS is a big part of this — but so too is the mindset that Australians must always and everywhere be cushioned from short-term economic shocks, even at the cost of long-term prosperity.

While the cut to fuel excise tax may be headline grabbing (and create a poison pill for Labor should they win office in May) its temporary nature means we are not having a bigger conversation about revenue and roads and where the money should come from.

Likewise, it is great that the government recognises the inability of entire generations to buy houses and set down roots — things that conservative governments should encourage as a matter of course.

But letting a relatively small number of first home buyers get into the market with a smaller deposit will just put more heatinto a property market that was beginning to cool is a minor measure when what is required is greater vision around increasingsupply and even thinking about that third rail of politics, negative gearing.

And cash payments and top-ups are great, but they are no substitute for actually putting more money in peoples’ pockets by legislating tax cuts and letting them keep more of it in the first place.

The Morrison family from Waterfall — Paul and Mara Morrison with their two children, Jacob, 13, and Gabi, 11 — are not related to Prime Minister Scott Morrison but are the type of demographic being targeted under cost of living measures. Picture: Justin Lloyd.

Yes, it is an election year, and while this is definitely an election year Budget targeting battleground seats and constituencies, Mr Frydenberg cannot be accused of mounting an egregious vote buying campaign.

At the same time, it is also a Budget that despite showing Australia in a strong fiscal position fails to tackle harder questions.

When Australia went through wrenching economic reform under Hawke and Keating and Howard big, structural things were done like floating the dollar and creating the GST, all of which left the country better off in the long run.

To be fair to Mr Frydenberg, it is frankly hard to imagine a Treasurer of any stripe turning down cheap money and imposingshort term pain for long term gain.

But Australians should remember this good fortune can’t last forever.