Budget 2022: Jim Chalmers puts hard calls on hold in a forgettable economic statement
Jim Chalmers’ first budget could well be forgotten by the end of the week except for the frightening prospect of a global economy “teetering on the brink”.
This isn’t a harsh judgment or a condemnation of the Treasurer. It is simply the reality that Labor’s first budget was little more than a checklist of fulfilled election promises using re-purposed Coalition “waste and rorts”.
It isn’t a complete sham or charade of a budget but it lacks the hard decisions which would seem to be necessary given the grim economic forecasts. It is more like an economic statement.
There are no surprises, no new taxes, no spending cuts and, most importantly, no attempts to address the dire, long-term structural economic problems of debt, a decade of worsening budget deficits as a proportion of GDP, rising inflation, rising unemployment, stagnant real wages, falling growth and spiralling energy costs.
The bright spot in budget repair from the tyro Treasurer is the proper and appropriate application of a one-off $40 billion revenue boost from commodity prices to cut the 2022-23 deficit to $36.9bn.
Much of the rest of the budget is a parade of promises on child care, paid parental leave, public medicines, affordable housing, TAFE places, “cheaper and cleaner energy”, health care and wages which Chalmers says is “cost of living relief which is responsible, not reckless”.
Labor is being restrained on general spending although all “savings” from ditched Coalition programs and extra tax revenue have been spent on Labor’s priority projects.
All this means that Labor – with the telling exception of cutting energy bills by $275 a year – can claim it has delivered on its election promises and can now focus on the real economic challenges in the May 2023 budget.
Even Chalmers and Treasury concede what was not done in this budget is essentially more important than what was done.
Chalmers said: “Australians know there are hard days to come, and hard decisions to accompany them”.
“This is just the beginning of our budget repair work, and it’s just the beginning of the conversation we need to have as a country about our economic and fiscal challenges,” he said.
Treasury’s budget outlook contained a similar warning about the real decisions to come declaring: “While this budget has begun the critical task of budget repair, further work will be required in future budgets to rebuild fiscal buffers and manage growing cost pressures. The government will continue the task of reviewing programs in future budget with a focus on enhancing the quality of spending.”
At this stage Chalmers is leaving open the balance between new taxes and spending cuts to address the necessity of economic and budget repair, but it all means that the October budget of 2022 will pale into insignificance compared to the necessary challenges of actions of the May 2023 budget.
That’s why this budget, apart from a warm inner glow for Labor, could be gone by Saturday.
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