Recovery budget will test Scott Morrison — is he up to it?

Scott Morrison revels in the big announcements. Picture: NCA NewsWire/Joel Carrett

If the national cabinet has exposed the limits of Scott Morrison’s powers and authority, and it surely has, then the budget is his chance to show the extent of his courage and imagination.

Any mug politician can flood the joint with money. They all come fully formed with the spending gene.

But it takes a special one to recognise the times demand those two qualities (often nominated by Paul Keating as essential for success in leadership) to help refloat and renovate the economy.

The October 6 budget, the first instalment in the government’s recovery plan, can’t COVID-proof Australia. Only an effective vaccine can. But the government must outline a plan for a COVID-safe environment to restore certainty and remove fear from business and the community.

If that could be done with fistful of dollars, grand statements, homilies and clever marketing then we are sweet. Unfortunately it will take more than that, particularly if a vaccine can’t be perfected within a year or, worse, never materialises.

As scary as the prospect may be for people worn down by so much upheaval, the Prime Minister and his eternally optimistic Treasurer, Josh Frydenberg, have a heaven-sent opportunity and a God-given responsibility to make enduring changes, not only to accommodate the ones the virus has forced but also others that will outlast it.

The government can live with the flat reaction of investors to its low-emissions plan. It can brush off Labor’s put-down that without a target, its roadmap leads nowhere. It can’t afford the same underwhelming reaction to the budget. It has to, with substance, shape the road to somewhere.

Even now and even among rock-solid Liberal voters, a common response when people are asked to nominate the best thing Morrison has done is that he prevented Bill Shorten becoming prime minister. Hardly a ringing endorsement.

It means that while Morrison remains favourite to win next time, there is still hope for Labor so long as Anthony Albanese can show he has learned the lessons from four straight losses and a fifth looming.

The Opposition Leader has to put up a few solid alternatives, without rancour and without spending even more than the government. It would be much better if he spent less or spent the same and did it smarter. He has to shred Shorten’s legacy of endless higher taxes. And he has to be crafty enough and agile enough to hang on to Victoria while winning back Queensland.

No pressure, but his reply to the budget will be the most important of his career.

Big hint. The one overarching, unifying issue? Jobs. They are central to everything, the answer to every question, whether it is climate change or tax or infrastructure, medical-scientific research or community wellbeing.

Labor is sensibly waiting to see the scope of the expected tax cuts before committing to supporting them, suspecting there will be a hook or a wedge built into the package. The pressure on the government to bring forward all its planned future tax cuts, or to abandon or convert changes providing hefty cuts for high-income earners, or to abandon all of them altogether will soon be piled on to Labor.

In 2007, the last time federal Labor scored a handsome federal victory, Kevin Rudd was under pressure to accept the Howard-Costello tax cuts in their entirety. Rudd refused. He matched the cuts for low and middle-income earners, then allocated the money that would have been spent reducing rates for high-income earners to funding for school laptops.

Albanese could do something similar. Unless the government beats him to it given its propensity to co-opt Labor policies. The opposition accepts Australians deserve tax cuts but baulks at providing them for the top end while the homeless and low-income families cry out for housing. Large-scale funding for social housing creates jobs and reduces inequality. It is an unequivocally good thing to do. It also might help Labor win back a few tradies.

Labor also has hopes of wooing small businesses and weaning them off the Coalition. Frydenberg’s plan to introduce a US-style bankruptcy system for businesses with liabilities under $1m will help operators survive the pandemic by enabling them to trade through difficult periods. It will rescue thousands of small businesses from oblivion and spike Labor’s hopes. So will the wage subsidies when JobKeeper ends. The subsidies and last week’s better-than-expected unemployment figures, which have forced Treasury to recast some numbers, will make the government’s task of ending JobKeeper easier, blunting Labor’s expected attacks.

Morrison revels in the big announcements and there will be few bigger than this budget. He presents with such authority, such conviction, that in that moment and the moments that follow it is impossible not to believe him, then near impossible to question him when delivery falls short or he has to do a U-turn. The inclination has been to forgive or forget. He has been cut much slack.

That will not last, so just a few reminders from the recent past and why it’s best to understate.

“The budget is back in the black”: It wasn’t and it won’t be for a long time, probably not in the lifetime of most of us anyway. Frydenberg disputes this but in a speech on Thursday will concede surpluses are years off. At least deficit is one thing we have learned to live with.

“The economy will snap back from COVID-19”: It hasn’t and it won’t. “We can go about life as normal”: That was not a good idea when he said it, we still can’t, and perhaps may never be able to. “Come rain, hail or shine there will be a national hotspot definition”: It has rained and hailed, spring has sprung and still the states decide what’s hot and what’s not. “Bringing more Australians home is a decision, not a proposal”: Turns out it’s a proposal only partly met because, much as Morrison decrees, premiers decide.

Morrison now threatens to build a gas-fired power plant if private investors don’t agree by April next year to deliver 1000 megawatts of new dispatch­able energy to replace NSW’s Liddell power station, set to close in 2023. This once improbable scenario from a Liberal-led government suggests if Qantas and the Commonwealth Bank misbehave the government could buy them back or fund competitors. After deciding to restore the National Broadband Network to the Rudd vision, in preparation for its sale to fund who knows what, anything is possible.