Budget 2020: It’s a budget Labor would have delivered; Frydenberg dodges reform and gambles on Covid-19 vaccine

Opposition leader Anthony Albanese during Question Time in the House of Representatives at Parliament House in Canberra. Picture: Sean Davey.

What the budget lacked in imagination, courage or elegance, it made up for in spread and sheer volume.

It was a mind-boggling, jaw-dropping smorgasbord of spending. Big tax cuts, big incentives for business to invest, the biggest wage subsidies, the biggest welfare bill, the biggest deficit, the biggest debt, set to balloon to $1.7 trillion over a decade.

It was big in every way, except on reform which remains a faint hope for the next budget in May, although this was the time to do it, to boldly invest political and financial capital in change, not only to bring forward already promised tax cuts and an investment splurge, which Labor had suggested well before COVID-19 in any case.

Later will be harder. With an election a year away if all goes well, the government decided it was safer, surer, to do everything which had been done before, except much more of it, with across-the-board stimulus calculated at more than $500bn.

In the short term the government will get credit for plotting a thoroughly conventional, rip-snortingly expensive course through the pandemic, blunting the impact of the recession.

From big business to small business there was praise. Australian Industry Group chief executive Innes Willox reckons almost every company would feel all their Christmases had come at once. Peter Strong, the chief executive of the Council of Small Business of Australia, thought it constructive but looked forward to more in May.

In the years ahead, however, it will be seen as a missed opportunity. Those who were happy with how things were, who want to see all the pieces put back together, will be satisfied. Those who worried the economy was already faltering before the pandemic will worry even more that the government baulked when it should have been bold.

And yet in one sense it has been very bold. Success or failure of this budget will be determined by a single event, largely outside the government’s control. The big hope is that confidence will rebound, people will spend, businesses will reopen and rehire, that there will no second or third waves, no more lockdowns, no more border closures and a rebounding of global economies. None of that can be assured without a vaccine.

The big spin in the previous Morrison-Frydenberg budget, which feels a lifetime ago, was that it was back in the black. It never was, despite the mangling of the language and the bending of the truth to convince people otherwise.

The big punt this time, the heroic assumption, is that there will be an effective vaccine available for all Australians by the end of next year. Everything hinges on it. Josh Frydenberg has admitted the document bearing his name, which carries Scott Morrison’s DNA, which predicts a rebound in gross domestic product to 4.25 per cent through 2021, depends on that.

There are grounds for optimism that it will happen, although talking it up or ignoring the alternative risks comparisons with a hallucinating Donald Trump, who has fallen victim to a mutated Trump derangement syndrome. But that’s a whole other column.

The federal Treasurer, a polished performer confident enough not to fear sharing the limelight, which is just as well, asserts there can be no economic recovery without a jobs recovery, yet he knows both will be stunted without a vaccine.

He was happy to tell Sky News’ Kieran Gilbert on Tuesday night that early arrival of the vaccine, before the end of next year, could add 1.5 per cent to GDP. He wouldn’t be drawn on camera on the impact if it’s delayed. It’s obvious and it’s in the budget papers. Recovery would be sluggish, slow and even more costly.

It is the other potential big black hole in this budget, yet the Prime Minister and Frydenberg are loath to canvass an alternative scenario of life without a vaccine beyond referring repeatedly to the uncertainty of the times. There is no whiff of a plan B.

It’s right and proper for Frydenberg and Morrison to provide reassurance and confidence. It is also right and proper they prepare people for the possibility it might come much later — with real questions about how the country will get through next winter — or might never come. Unless the overriding objective is to get through the election then worry about the rest later.

Sounding impatient, Morrison says when they look at the budget, people know the government has provided the incentives to “get on with it”.

When the ABC’s Sabra Lane suggested his budget strategy would be ineffective without a vaccine, he responded that was a “fairly cynical view”.

Actually it sounded pretty logical. There is the predictable bluff and bluster, dodging and weaving from the Prime Minister whenever he gets a curly question.

He says the fact the budget is built around a vaccine is merely an “assumption”, insisting the tax cuts, the boost to business will be delivered regardless. No one is questioning that, not now anyway, but it is a pretty big assumption they have made and if it didn’t happen would mean almost every number released on Tuesday night would need to be revised.

Assurances the interest bill is low and all this spending and debt is affordable does not mean there is a bottomless well of money to draw on if all goes even more belly-up — not for Anthony Albanese and not for Morrison, although despite the stupendous spending, Labor still sees opportunities — social housing, the aged, women.

Would anyone notice or care if Labor spent a few additional billion on top of so many hundreds of billions and trillions to fill the gaps? Or would the Coalition still argue debt and deficits were Labor specialties?

The government did not seek to wedge the Opposition Leader, however it did leave him with little choice except to support the measures it had suggested and which the government co-opted.

At heart, it’s a budget Labor would have comfortably delivered, making its search for relevance that much harder. Albanese will get his chance on Thursday night to show how he would meet the challenges which he reckons the government has failed and to buy himself back into the fight.