Federal Budget 2018: Verdict
Our experts deliver their verdicts on Scott Morrison’s 2018 budget.
Finally some tax reform, but don’t hold your breath. Reformers will have to keep the champagne on ice until 2024, when the second-top tax bracket is set to disappear. Until then, a few tweaks will deliver $10 a week to the bulk of taxpayers, or $3 a week if you earn more than $90,000 — not even a flat white.
Malcolm Turnbull has been far and wide announcing $24.5bn worth of transport projects. It looks like a package with a fair amount of pork in it, with particular emphasis on Queensland, WA and Victoria, as the government seeks to hang on to seats. The rub is that four-fifths of the $24.5bn is committed beyond the forward estimates.
Malcolm Turnbull is honouring the promise to lift defence spending to the benchmark of 2 per cent of GDP, but the budget papers hint a future dilemma for policy makers.
While the government has committed to its ambitious $90bn continuous shipbuilding program, the key assets in this imitative — the new submarines, future frigates and offshore patrol vessels — are all in design stage with funding yet to exceed $2bn.
Once these projects advance, they will soak-up a much larger portion of funding. This will create new pressures within the defence budget and raise fresh questions about whether an ambitious continuous shipbuilding program can be accommodated within the 2 per cent target.
The question of whether defence spending should be pegged to a higher portion of GDP is likely to be raised more frequently within coming years.
A miracle year of jobs growth has set the budget up for years of prosperity, despite conservative views on commodity prices and company profits. With a larger workforce, the optimistic view about wage growth sees personal income tax revenue soaring. If wages do not bounce back, budget recovery will be more subdued.
Business missed out on major reform or anything by way of goodies but was also spared any hits as the Government has lined up the big banks to help pay the bulk of any tax cuts that come big business’s way. The digital giants face a likely tax change with the Government unveiling a review into their affairs while at the same time welcoming the benefits of big data to improve tax integrity and bank competition.
It wouldn’t be a budget without rebadged, tricked up funding of skills and training programs. A year after announcing the Skilling Australians Fund, which is yet to get off the ground, an extra $300 million has been promised to kickstart the apprenticeship vehicle. But closer scrutiny of funding allocations not contained in the budget papers reveals promised spending has actually been cut by $200 million over three years.
Like the budget deficit, the Australian security state has grown relentlessly during the past few years but now appears to be levelling out. The defeat of Islamic State in the Middle East has reduced the terror threat here. ISIS remains a potent source of inspiration for would-be jihadists, but the rate of attacks has slowed. The agencies have rightly been receiving fat budgets for years. There is simply no case for additional major funding boosts.
This is a busy budget for older Australians but the federal government has become a jack of all aged funding and mastered none of it. The headline figure of 20,000 places for home care is needed, but only 14,000 of them are new. There is an array of measures which help pensioners earn more without losing their pension with employer incentives for hiring older workers. Spiritually, this budget is for the oldies but in the flesh it’s not quite there.
After swinging hard in last year’s budget, this year Education Minister Simon Birmingham is taking a break. Even though he’s busily trying to implement his Gonski 2.0 school funding plan, that is not part of this year’s budget. And in tertiary education the minister has gone missing. After cutting university funding by executive fiat in December, he apparently thinks his work is done. But universities will be mollified by $1.9 billion promised for research infrastructure over 12 years.
The budget talks tough on welfare, but in reality it takes a softly-softly approach compared to previous years. No one will feel sympathy for the fine defaulters and fugitives who’ll have their benefits cut, and forcing ex-welfare recipients to pay their debts is a no-brainer. Centrelink clients will jump for joy if the $50m for call centres means they can finally speak to a human.
Greg Hunt has delivered reforms, some efficiencies and a strong election platform. The key elements of rural workforce changes, solid public hospital funding, and a tightening of drug financing, combined with much-needed investment in mental health and medical research, are good for the portfolio and good politics.