Federal Budget 2016: Treasurer Scott Morrison treads softly toward election

WITH 59 days to go until the election, Scott Morrison cannot afford, politically, to scare the horses, and couldn’t afford, literally, to hand out sweeteners, writes Ellen Whinnett.

WITH 59 days to go until the election, Scott Morrison cannot afford, politically, to scare the horses.

And he couldn’t afford, literally, to hand out the vote-buying sweeteners that election Budgets usually contain.

The Treasurer’s first Budget sends the Coalition off to the polls at a trot rather than a gallop, with red ink stretching beyond the horizon of the forward estimates.

The Budget is tracking Australia’s general government sector net debt at $325.9 billion this financial year. It will cost us $12.6 billion — enough to build 12 new hospitals — just to meet the interest payments this year.

The deficit between what the government makes and what it will spend is an eye-watering $39.9 billion ($37.1 billion next year), although Morrison says this will fall to $6 billion in four years.

This is optimistic, as it relies in part on the government getting $13 billion of “zombie savings’’ — measures already blocked by the Senate — through the new Senate, which will be elected after the double-dissolution election on July 2.

Treasurer Scott Morrison has sent the Coalition off to the polls at a trot rather than a gallop.

There is a forward-looking 10-year tax cut plan, which will eventually see businesses turning over up to $100 million paying 25 per cent in company tax.

The entire package will cost $5.3 billion in forgone revenue in the next four years, but the government is banking on the short-term pain being offset by the long-term gain of more people finding jobs as companies grow.

There’s $840 million being spent on a convoluted, lengthy training and internship program. It aims to get young people into work through a combination of incentives, including a $200 boost to their dole payments and bonuses of up to $10,000 for businesses.

It’s the kind of interventionist scheme that would make Victoria’s Labor Premier Daniel Andrews proud.

There’s also a bunch of nip-and-tuck savings measures that will upset the active lobby groups such as the Australian Medical Association and, possibly, the pensioners.

Where Morrison has taken bold action is by going after rich superannuants, who are being smashed in a crackdown on the tax concessions on their super contributions.

This is unusual Liberal ground, but they must figure infuriating 4 per cent of superannuants is better than going to war with the other 96 per cent of superannuation account holders.

The government will also unleash an army of 1000 boffins in the Tax Office to dig another $3.9 billion in tax out of the pockets of multinational companies that have been engaging in creative bookkeeping and shifting their profits offshore to keep their taxes down.

These moves will go some way towards heading off a determined Labor push to frame the election as a “top hat versus hard hats’’ stoush, with the famously wealthy Prime Minister, Malcolm Turnbull, on one side and the union man, Opposition Leader Bill Shorten, on the other.

Morrison hasn’t hesitated to be a political bowerbird, copying Labor’s tobacco tax increases (without the $19.5 billion funding black hole) and adopting the principles of Labor’s superannuation crackdown, going even further than Labor had promised.

There’s also a thread running through this Budget encouraging aspirational Australians to have a go. Small businesses are told they can grow their turnovers without being penalised on tax.

Half a million middle-income earners pulling in about $80,000 can work extra hours, or get a promotion and a pay rise, without paying more tax.

But overall, this is indeed the modest Budget Morrison had been promising.

It’s so modest, the impact on the Budget bottom line is just $1.7 billion in the first year.

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