Andrew Bolt: Federal Budget a surplus too late as Labor threat rises
This is the Budget that brings home the bacon — almost. But it’s less a measure of what we’ll gain from the Liberals as what we risk losing under Labor, writes Andrew Bolt.
Andrew Bolt
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This the Budget that brings home the bacon — almost. How the Morrison Government must wish it could delay the election next month by just two months.
Yes, middle-income earners will get twice as big a tax refund than the Liberals promised last year — up to $1080 — but not until they’ve put in their tax returns in July.
It’s still just a promise, then, to Australians who haven’t seen real tax cuts in years. So is the plan to cut the 32.5 per cent tax rate to 30 per cent — but not until 2024.
Still, the policies are very good. The Liberals are rewarding effort. But so much else in the Budget is also missed-it-by-just-that-much.
The Budget tips a healthy growth in wages, with the wage price index to rise to 3.25 per cent — but not now, as Treasury thought last year, but in 2022.
After 12 years of deficits, this government announces a surplus — but not for this financial year, as once hoped, but the next.
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And this government is going to start repaying the $370 billion net debt racked up by past Labor and Liberal governments — but only in tiny dribs and drabs.
In fact, the Budget surplus next financial year will be just $7.1 billion, rising to only $9.2 billion three years later. One puff of wind and it will be gone.
And that puff of wind is likely to be a gale if the polls are right and Labor wins the election, almost certain to be called within days.
This is the real message of a Budget that’s little more than an election pitch by a government in horrendous polling strife.
Treasurer Josh Frydenberg has put together as strong a case for re-electing the Liberals as is possible in the short time he’s had. His Budget is no cynical giveaway, and as sober as you could hope just weeks before an election.
But the Budget is less a measure of what we’ll gain from the Liberals as what we risk losing under Labor.
It shows how easily Labor could destroy the Liberals’ slow progress in pulling us out of a debt spiral while keeping the economy growing, rising next financial year to a predicted 2.75 per cent.
As Frydenberg pointed out in his Budget speech, the Liberals have given us higher growth, lower unemployment and a healthier balance sheet than we got when Labor last ran the country, while still giving us record funding for hospitals and schools.
But check how fragile the Budget’s foundations are, and how much more fragile they’d be in Labor’s hands.
That’s not because the Budget papers warn that growth in China and Europe has recently slowed, spelling bad news for our exports.
Nor is it because much of the Budget’s good news is just the product of a Ponzi scheme, with massive levels of immigration — 240,000 people a year — giving the government more tax revenue but also forcing it to spend tens of billions of dollars to ease the squeeze, including an extra $3 billion in this Budget on an “urban congestion fund”.
No, Labor is no worse than the Liberals on those fronts.
Labor’s real threat comes from its high-tax plans and its mad global warming policy, both of which threaten to choke our modest growth and wipe out these tiny surpluses, leaving us even more dangerously exposed when the world economy next slows.
Consider: Labor’s global warming policy on Monday promised to slash our emissions by 45 per cent by 2030, with measures that would particularly hurt coal mining and coal-fired generators. Labor is also hostile to new coal mines, like the giant Adani project.
Yet the only reason this Budget could afford tax cuts is that prices for our coal and iron ore exports have been stronger than predicted. Iron ore is the standout, jumping from the originally tipped $US55 a tonne to over $US80, but prices for thermal coal are historically high.
No coal, no tax cuts.
And fewer coal-fired power stations means even higher electricity prices. That’s why leading economist Brian Fisher, of BAEconomics, estimates Labor’s policies will wipe out a quarter of the growth expected by 2030.
Then there’s Labor’s big tax hits on investors, through changes to capital gains, negative gearing and franking credits. Add Labor’s old itch to spend, and Frydenberg’s Budget will soon be like a gauge sticking out of a flooded river.
Labor is the hot favourite to form government in May and it would junk this Budget, leaving it only as a reminder of how close we came to finally starting to pay for the massive spending binge that this nation has luxuriated in since Labor’s Kevin Rudd got his hands on the surpluses left by the Howard Liberal government.
Frydenberg hasn’t been able to leave as much in the cupboard for Labor, but that just makes it worse.
It will take Labor much less time to throw away what six years of Liberal attempts to balance the books have finally achieved. But achieved just a bit too late.
Andrew Bolt is a Herald Sun columunist
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