Spending rails essential to curtail deficits and debt

Anthony Albanese and Peter Dutton enter Sunday’s campaign launches with the election contest still open. Labor pulled ahead in Newspoll after the Coalition’s slow start and the Opposition Leader’s backdown on working from home.

But Mr Dutton and Angus Taylor matched the Prime Minister and Jim Chalmers in this week’s debates. And Energy Minister Chris Bowen had too much lead in his saddlebags to overcome opposition spokesman Ted O’Brien’s well-argued case in their debate on Thursday.

Rising alarm about the abhorrent prospect of the Greens having any influence on a minority Labor government also has helped steady the opposition ship. Mr Albanese cannot continue ducking the issue of Greens preferences on the grounds it’s an organisational issue. Too much is at stake.

In a contest where economic reform – including tighter and clearer fiscal rules – should be central to an informed and frank debate about what the public can afford governments to spend, Mr Dutton took a tentative step forward this week as the Treasurer tried to turn the prospect of secret spending cuts against the Coalition.

In his first major economic announcement of the campaign, Mr Dutton pledged to funnel 80 per cent of commodity revenue windfalls, when they exceeded Treasury forecasts, into two new future funds. The Future Generations Fund would pay down the nation’s $1.2 trillion debt while also supporting defence and sovereign capability.

A Regional Australia Future Fund would bankroll investments in regional Australia. Old habits die hard, so a Coalition government would need to keep the Nationals’ pork-barrelling instinct at bay. The value of the policy is its objective to put a “hard limit on spending growth”. In the nation’s current predicament, with no barrier to stave off the ravages of another financial crisis, that should be a no-brainer for both sides of politics.

Treasury predicts debt repayments will be the highest structural spending pressure in future budgets, Geoff Chambers wrote this week. And the pre-election economic and fiscal outlook released by Treasury and the Finance Department confirmed four years of deficits totalling $179.5bn and debt rising to $1.2 trillion. This financial year’s deficit is forecast to be $27.6bn.

Dr Chalmers ridiculed Mr Dutton’s proposed funds as a recipe for bigger deficits, not smaller, and said extra revenue should be used to directly improve the budget bottom line or pay down debt. But voters are entitled to see Labor’s proposal to curb spending, debt and the cost of servicing it.

The nation is on a disastrous fiscal path, as Chris Kenny writes in Inquirer, with federal funding for health, education and the National Disability Insurance Scheme in permanent expansion, despite unimpressive outcomes.

If Sunday’s launches are to mark a new, decisive stage in the campaign, Mr Albanese and Mr Dutton must both bring forward effective productivity strategies, especially to benefit the private sector when most jobs growth is in the so-called care economy at taxpayers’ expense.

On Thursday, 20 business groups representing large companies, small business and the energy, transport and travel sectors called on the major parties to prioritise long-term economic plans that recognised the nation’s challenges and the contributions of successful businesses.

Problems such as the uncompetitive taxation regime, protracted delays in the approval process, energy costs red tape and the problems that had left half of the nation’s 2.6 million small businesses worried about keeping the doors open needed to be addressed, the group said.

Although the Coalition is averse to risking a backlash by advocating industrial relations reform, Labor changes such as rules covering casual employment and the right to disconnect need to be addressed.

Housing is expected to be prominent in both parties’ campaign launches, and the leaders need to avoid more heavy spending on handouts and focus on efficiency gains, freeing up land supply and the availability of skilled tradies.

With the Easter long weekend and Anzac Day ahead, and early voting centres opening from April 22, the coming week is when both leaders must cut through on economic reform. It’s time for serious policy action now that the lacklustre warm-up is over.