Andrew Bolt: Many Budget winners, but Liberals aren’t among them
THIS is a Budget Labor could live with. There’s an election-year spending spree, tax cuts for poorer Australians and just a worthless IOU to the “rich”. Oh, and there’s more debt, of course, writes Andrew Bolt.
Andrew Bolt
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THIS is a Budget Labor could live with. There’s an election-year spending spree, tax cuts for poorer Australians and just a worthless IOU to the “rich”.
And it’s all paid for by a cash windfall, massive immigration and a gamble that the economy will improve faster than many economists predict.
Oh, and there’s more debt, of course — our 11th straight deficit in a row, next financial year.
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Yet this Budget is a political flop. It still leaves the Turnbull Government a sitting duck for cashed-up Labor to outbid it with bigger tax cuts and bigger surpluses.
Treasurer Scott Morrison said in delivering this Budget that it showed “the government’s living within its means”.
If only. In fact, it shows the government increasing spending next financial year — an election year — by $25 billion, while slapping $14.5 billion on the credit card.
This is the biggest spending increase in four years as the government fights for its political life.
Spending goes up 4.2 per cent, double the inflation rate. The only thing saving the government’s reputation is that revenue jumps even more — 6.6 per cent, thanks to higher prices for coal and iron ore, higher company profits and a tidal wave of immigrants that filled many of the record 415,000 jobs the government boasts it created last year.
In last year’s Budget, Morrison swore that any such unexpected windfall would go to repaying our huge debt.
But there’s nothing like an election to make a politician spend what they should save.
So there are “congestion busting” transport projects, and tax cuts of up to $10 a week for workers on less than $87,000 a year, although structured so they don’t pass on to anyone on more than $125,000.
There’s also a tiny change to the tax brackets: the 32.5 per cent tax threshold will be lifted from $87,000 a year to $90,000.
But anyone richer can go whistle.
The government promises that “in 2022-23 we will make substantial changes” to help them, but who trusts a government to keep a tax promise four years from now?
Nor do the Liberals need to help the “rich” when Labor vows to hit them with a new “wealth tax”.
True, this Budget does now promise a “return to surplus” one year earlier than promised.
But that will be a tiny $2 billion in two years — so small that the gentlest wind of change could blow it away.
What if the government’s claim that it can grab an incredible $3.6 billion from a crackdown on the black market in tobacco goes up in smoke?
The surpluses in the two years afterwards are also modest, neither rising above $16.6 billion, meaning the Budget barely puts a scratch in the net debt of $370 billion that Labor and the Liberals have racked up over the past decade.
Still, let’s count our blessings.
This Budget does show some improvement in an economy that was flatlining, and predicts a rise at last in living standards, with wages growth rising from 2.25 per cent now to 3.25 per cent in two years.
The trouble is the government is betting its Budget on these rosy assumptions.
It predicts that 3.25 per cent wages growth when the Reserve Bank Governor last week warned we should get used to around 2 per cent for a while.
Likewise, it tips growth to increase to 3 per cent next year, when many economists are sceptical.
But any such reckoning will be after the election.
The government’s most urgent challenge is to use this Budget to improve its terrible polling, with Tuesday’s Essential poll showing it still trailing Labor by 47 per cent to 53.
I doubt this will help much in the long run.
This Budget will reassure many voters the government is plodding along quite safely, but it’s plodding to just where Labor wants.
This is not just because windfalls for the government are also windfalls for Labor to promise away.
More crucially, it’s because the government’s tax cuts and surpluses are so small that Labor can now easily outbid them.
Take that $10 a week tax cut, which cost the Budget $13 billion over four years.
The government’s nightmare is that Labor has a war chest of more than $200 billion over 10 years, thanks to its promised crackdown on negative gearing and capital gains tax, its scrapping of rebates for unclaimed franked dividends and its opposition to the government’s tax cuts for big business.
It will be a doddle for Labor to outbid the government on personal tax cuts and also promise less debt and deficit.
Labor’s Treasury spokesman, Chris Bowen, was on Tuesday already talking like a born-again Liberal, huffing about the government’s “wafer thin” surpluses and insisting “we need a much bigger focus on debt management, on debt repair”.
Labor always wins government by promising to out-Liberal the Liberals.
Now it’s set up for Labor to do it again.
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