Budget week sets markers for political battle ahead

The Albanese government’s honeymoon is over. What sounded plausible in opposition – getting real wages “moving”, doing more to invest in renewables to combat climate change while cutting power bills by $275 – is looking increasingly fraught. Tuesday’s budget, while restrained and responsible in spending for the current financial year, baked in new levels of heavy social spending, especially on the NDIS, that will cost taxpayers hundreds of billions of dollars over the coming decade. As reported on Saturday’s front page, the fastest decline in real incomes in history, due to inflation and surging mortgage costs, is set to leave the average Australian family, with a home loan, almost $13,000 worse off this year. In his budget reply speech on Thursday, Peter Dutton turned Labor’s rhetoric back on the government. “Everything is going up, except your wages,’’ the Opposition Leader said, reminiscent of Anthony Albanese’s campaign rhetoric. “The cost of living, power prices, taxes, interest rates, unemployment and the deficit are going up, or will be going up, under the government’s predictions.’’

From now, it’s political game on, with Mr Dutton showing an ability for honing in on the salient issues that will increasingly concern voters as their incomes fail to keep pace with ordinary living costs.

Anthony Albanese and Jim Chalmers did not create the inflationary pressures tearing at living standards any more than Scott Morrison and Josh Frydenberg created the economic effects of Covid. From now on, however, the economic situation, and the response to it, belong to Labor, which has adopted a “big government’’ interventionist approach, especially to housing, aged care, the NDIS, industrial relations and the energy crisis. The latter, as reported in Inquirer, is emerging as the equivalent of the Albanese government’s Covid emergency. The budget forecast electricity prices would rise by 56 per cent in the next 18 months and gas prices by 44 per cent. Energy ministers, meeting in Melbourne on Friday, agreed to urgently impose tough new regulations on the sector to tackle price spikes and clamp down on “obscene profits” of gas producers. Victoria is backing a price cap on gas, and Energy Minister Chris Bowen has left open the option of a super profits tax for fossil fuel exporters. The industry’s response to that possibility, at a time when more investment is crucial to increase supplies, remains to be seen. A similar proposal hastened Labor’s demise in government almost a decade ago.

In his budget reply, Mr Dutton focused on several energy issues close to the hearts of voters concerned about power supply and costs at home, in their small businesses and for the potential to drive up prices of goods and services. These include Mr Bowen’s acknowledgment that to reach Labor’s 43 per cent by 2030 emissions-reduction target, it will be necessary to build 40 wind turbines every month and install 22,000 solar panels every day for the next eight years. Mr Dutton also mentioned the hundreds of billions of dollars cost of “rolling out poles and high-voltage transmission wires in towns and suburbs’’, carpeting regional communities and farms with up to 28,000 kilometres of new high-voltage transmission lines. “That’s almost the entire coastline of mainland Australia, or the distance of travelling from Melbourne to Perth and back four times,’’ he said. “Every dollar spent on new transmission lines will be paid for by consumers, through higher electricity bills.’’ It is indicative of how Mr Dutton intends to go after the issue until the next election. The debate he is seeking to open up on the benefits of investing in next-generation zero-emission nuclear small modular reactors – which will be part of the energy mixes of Canada, France, Japan, South Korea, the UK and the US – is one the nation needs to have.

Mr Albanese has a commanding lead over Mr Dutton as preferred prime minister. But if the opposition sticks to its traditional economic principles of encouraging enterprise in preference to spending on larger government footprints, voters will pay attention. Bring on the debate.