Miranda Devine: Josh Frydenberg tried to out-Labor Labor with Federal Budget
Josh Frydenberg, the third Liberal Treasurer in six years, finally delivered a budget surplus, but much of the document is an exercise in keeping your powder dry until the election campaign rather than hoping for a sugar hit in the polls, writes Miranda Devine.
It’s been a torrid six years under the Abbott-Turnbull-Morrison governments, but the third Liberal Treasurer off the rank, Josh Frydenberg, finally delivered a surplus, the first since 2007. Amen.
Just in time for Labor to spend it all again, if you believe the polls.
Killing off Labor’s deficit is the most Liberal feature of this budget, and a great achievement it is, the finest of Frydenberg’s 30 weeks in charge of the country’s finances: a $7.1 billion surplus and the first instalment to pay off the national debt which is costing us $18 billion a year in interest alone.
Tax relief and other measures to help small business are another plus in the budget.
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But that’s where the distinctively Liberal flavour ends. The rest of this document is more an exercise in keeping your powder dry until the election campaign proper rather than hoping for a sugar hit in the polls.
Frydenberg has tried to out-Labor Labor on everything from bigger progressive tax offsets, more apprenticeships, more preschool funding, to mentoring programs for female musicians and $1.5 million for a light show installation for Tasmania’s Dark Mofo festival.
Even the photos in the budget booklets are ostentatiously woke, with every permutation of identity politics catered for from the “diverse” families to the woman in a hard hat and high-viz tending to a concrete mixer. Not a John Howard white picket fence in sight.
Frydenberg, as he toured the media lockup, was most proud of doubling the low-and middle-income tax offset which will give 10 million taxpayers at least partial tax relief, as long as they earn less than $126,000.
“Following these changes,” he boasted in Tuesday night’s Budget speech, “our tax system will remain highly progressive. With the top five per cent of taxpayers paying one third of all income tax collected. And someone earning $200,000 paying 10 times as much tax as someone on $45,000”.
Cutting taxes is fine but since when has it been a Liberal value to boast that if you earn four times more you’ll pay ten times as much tax?
“It’s important we’ve always had a progressive tax system,” Frydenberg said when challenged in the lockup. “But the more you work, the more you’ll get paid.”
Well, you’d hope so. But capping the aspirations of wage and salary earners is more in the style of Thomas Piketty than Peter Costello.
And the fact is our tax system is one of the most progressive in the world, at 47 cents in the dollar (including the Medicare levy), 60 per cent more than the corporate rate, and cutting in at about twice average earnings. Only the Netherlands is more punitive, at around 50 per cent and cutting in at a lower threshold, according to the Treasurer’s chart comparing us to selected OECD countries.
As for his pie chart of revenue and spending buried in another budget document, even the trick of stretching the perspective so that the company tax wedge in the foreground looks bigger than the individual income tax wedge doesn’t hide the burden shouldered increasingly by the salaryman and woman. While company and resource rent taxes bring in $101.9 billion, income tax provides more than twice as much at $234.1 billion, by far the biggest single contributor.
Income tax comprises almost half of government revenue and bracket creep will continue to deliver more saps into the top bracket each year.
But this is the defensive strategy adopted by a government determined not to repeat Joe Hockey’s flamboyant 2014 Whack-A-Mole budget, just weeks out from an election. Frydenberg has internalised the Labor-Green critique of “unfairness” applied to that budget.
It’s worth seeing what the Howard government was delivering at the same stage of the electoral cycle, six years into office.
The last Treasurer actually to deliver surpluses (ten in a row) and pay down debt was Peter Costello, who inherited a $10.3 billion Labor deficit in 1995-96.
By 2001, Costello was presenting his fifth consecutive surplus, had repaid nearly $60 billion of Labor’s $80 billion debt and was cutting taxes by another $5 billion. By the time he finished in 2007, the Commonwealth was debt free.
Six years of Rudd-Gillard-Rudd put paid to that achievement and the poison pill of baked-in spending that Julia Gillard bequeathed to the Abbott government has haunted every Treasurer since.
Frydenberg has broken the curse this year but he says we won’t pay off the national debt of $373 billion until 2030.
In our dreams, under another big spending Labor government.
If Bill Shorten wins office in a few weeks, we may as well all head to Tasmania for some of that Dark Mofo.
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