Budget sets up election fight on tax, jobs, wages

From childcare to aged care, voters have a lot to digest about what the budget will mean for them, their families and future decisions on spending, saving and investing. Many of the options are explored in The Weekend Australian’s eight-page budget liftout. So are the new entitlements, superannuation changes and the consequences of debt and deficit. For political aficionados, the week sets the scene for the election later this year or early next year. Josh Frydenberg’s big-spending, high-debt budget struck deep into Labor territory. Heavy social spending on aged care, disability services and mental health reform redressed decades of funding and policy neglect by both sides of politics. The $17.7bn in aged-care funding was targeted to come to terms with the needs of our ageing population. Beyond the social spending the Treasurer baked into the books, the budget had a timely and sensible narrative. It built on last October’s budget, which is fostering the conditions for a business-led recovery that is boosting investment, jobs, profits and government revenue. However far and fast the economy bounds out of the pandemic — the medium-term growth forecasts in the budget papers are modest — the enterprise economy will need to do a fair share of the heavy lifting in paying down the deficit and debt. Fiscal rectitude and repair have been kicked down the road for another electoral cycle.

Across the dispatch box, Anthony Albanese’s budget reply speech on Thursday night showed that the opposition is struggling to differentiate itself from the Coalition. A social housing behemoth run by bureaucrats, built on borrowed money, will appeal to the most disadvantaged section of Labor’s base, though by no means to all of it. It will be unlikely to sway tradies and other aspirational voters in traditional Labor seats who work hard to make their way. Some Labor MPs have privately lamented the budget reply speech had nothing for middle Australia. Their reaction is no surprise.

In tactical terms, the Opposition Leader has learnt from Bill Shorten’s defeat in 2019. By comparison, Mr Albanese’s promises have been limited, although he is no fiscal conservative. But he is not presenting a big target and he is going out of his way not to irritate the constituencies the party alienated last time, such as mum-and-dad retirees whose franked dividends improve their incomes and quality of life. To fill the breach, a couple of Labor’s election tactics were clear on Thursday night — the culture of complaint and the politics of envy. Mr Albanese complained that the past eight years had been “very good” for Scott Morrison “and his mates’’. According to Mr Albanese, those years can be judged by a simple test: “Do you feel better off than you did eight years ago? Do you feel more secure at work? When did you last get a wage rise? Are you finding it easier to pay your bills? Are you more certain of your future? And importantly, that of your children?’’ But his test ignores the defining issue of the Morrison era so far: the pandemic. Amid the current global rate of about 750,000 new COVID infections being diagnosed a day and about 13,800 daily deaths, many voters will take a “glass half full’’ view of our nation’s situation. They feel fortunate to be well and employed. Those laid off during the pandemic know they were looked after under JobSeeker. Falling unemployment and better workplace training, which were key budget themes, offer hope for battlers.

On the negative side, as Labor points out, the vaccine rollout has been far slower than promised. Better quarantine facilities were and are needed. And the government was foolish to threaten jail for Australian citizens eager to return from India.

But despite the gaffes and scandals, as Troy Bramston writes in Inquirer, voters judge that the Prime Minister has been largely effective in responding to the pandemic: “He got the big thing right. Morrison leads Albanese by a factor of 2:1 as preferred prime minister in the polls.”

While the Coalition has adapted Labor’s penchant for big spending, a clear philosophical divide between the parties is clear. The government is stimulating business and households rather than relying on government solutions, as Mr Morrison said on Friday. When it comes to the crunch, tax, jobs and wages are likely to be the main election battlegrounds. Mr Albanese will be looking to the ACTU to stir up discontent over the lack of pay rises after a long period of restraint. The capacity of employers to pay, however, will depend on productivity gains. Friday’s news that more than 120,000 people have moved into work since the end of JobKeeper at the end of March, with more than 30,000 moving off JobSeeker and other support in the week before the budget, reflects one of the Coalition’s strengths. Jobs growth will be vital, over time, to wages growth. With the government’s stage three tax cuts for workers earning $45,000 to $200,000 already legislated, the abolition of the 37c in the dollar tax bracket and replacing it with a 30 cent rate will be a big plus for the Coalition. It creates a dilemma for Labor. Refusing to endorse the reform would risk derision at the polls from middle Australia. Both sides of politics have much policy work to do. Labor needs a credible economic direction. Mr Frydenberg has succeeded in getting the economy back on its feet. But longer term, as Business Council of Australia chief Jennifer Westacott says, economic strategy needs more ambition. Higher growth, advanced skills, the ability to live with reopened borders, and greater business investment will all be needed post-pandemic. Rebuilding has just begun.