A budget that’s a grab for votes is just not good enough

The country is overdue for a serious debate about what kind of government and reform we want – and desperately need.

Labor leader Anthony Albanese delivers his budget reply speech on March 31, 2022 in Canberra. The Morrison government's fourth budget was published on Tuesday. Treasurer Josh Frydenberg has delivered a federal budget deficit of $79.8 billion in the wake of the coronavirus pandemic, with a number of tax cuts to be introduced to ease the rising cost of living. (Photo by Martin Ollman/Getty Images)

Budget week became a contest between the measures laid out in Josh Frydenberg’s document and the scuttlebutt that the Prime Minister is a bully. Unwanted distractions versus a tried and tested pathway towards election victory.

The Treasurer did his job: the election-focused budget document is squarely aimed at buying votes and glossing over the fundamental economic needs, the answers to which could be painful and unpopular.

Three years ago, the government was eight points down in the polls going into the budget. The first Newspoll after that saw that Labor lead halved to just four points. This time around the Coalition is 10 points down. We will find out early in the week what, if any, impact Frydenberg’s fourth budget has had on the government’s electoral fortunes.

Meanwhile, Liberal senator Concetta Fierravanti-Wells used her farewell parliamentary speech to pour scorn on Scott Morrison, labelling him a bully and unfit to be PM. While it is easy to dismiss the claims as the rantings of a disgruntled member of the team who lost preselection the previous weekend, there has been no shortage of Morrison’s colleagues willing to label him everything from a “horrible, horrible person” (Gladys Berejiklian) to a liar and a fraud (Barnaby Joyce), and even a “complete psycho” (unnamed cabinet minister).

Were the attacks coming from just one disgruntled employee (because in politics I guess that’s what MPs and senators really are to a PM) with an axe to grind, that would be one thing. Especially if their colleagues universally disagreed with the assessment and thought it was the complainant who was the problem child. Allegations without evidence border on the worthless. But it seems that Morrison’s critics are spread more widely, and there is some evidence for how hard he plays his politics.

But what do people expect of an adversarial political system with entrenched factions?

We will have to wait to find out if the budget has flicked the switch from prime ministerial criticisms such that the campaign will be economically focused. If that’s happened, the government isn’t out of this electoral contest.

Not that the Coalition deserves the mantle of superior economic managers. Polls consistently show voters prefer them on economic management, but in truth both major parties have let Australians down and are likely to continue doing so for the foreseeable ­future.

The deficit is just shy of $80bn and national debt continues to creep up towards $1 trillion. Inflation is on the verge of being out of control, which means interest rates will have to soon rise. Yet the government is trying to encourage first-home owners into new loans with drastically reduced deposits, the exact opposite of what the banking royal commission urged.

While an unemployment rate of just 4 per cent (and predicted to fall even further) is a good thing, that headline figure is misleading. Underemployment is a huge problem, with more people wanting to work more hours but unable to. And the participation rate is too low, which masks the true rate of unemployment.

One of the most forgotten failures in the budget is the broken promise by the Treasurer to have begun budget repair long before now. Early in the pandemic, Frydenberg pledged to return to budget repair when the unemployment rate had a six in front of it. When it fell that low sooner than he anticipated he refined the pledge to 5 per cent. When we hit that target, Frydenberg dumped the commitment altogether, continuing to accumulate debt future generations will need to pay back, or at least service interest payments for, which are now climbing off the back of rising inflation.

So with an unemployment rate a full 2 per cent below where it initially needed to be for budget repair to begin, the government is instead spending like drunken sailors (breaking modern records for the spending to GDP ratio) hoping that doing so will buy it a fourth term.

What happened to promised tax and federation reform white papers from the Coalition’s first term in office? Or the GST reform Morrison flagged shortly after he became treasurer back in 2015? This country is overdue for a serious debate about what kind of government we want. Are we social liberals who think inequality needs to be addressed and governments need to do more to satisfy the needs of voters? If so, it’s time to debate how we do that.

It is always possible to slice into existing recurrent expenditure, but removing waste and unwanted spending won’t provide the extra dollars to increase spending on aged care, childcare, defence and education to answer the needs of the bleeding hearts and the international relations hawks.

Our population is ageing, which will put a higher burden on the health system, yet we don’t tax the family home, don’t have an inheritance tax and don’t tax the earnings on the first $3.4m couples have invested in superannuation. Even after that, the tax rate is only 15 per cent.

We need to be open to a debate about how we raise long-term tax-to-GDP ratios to meet the spending-to-GDP expectations of voters.

If we don’t think we can do that without killing economic growth and forcing investments offshore, then the political class needs to say so. Experts need to deliver the bad news too.

We live in a globalised world, so perhaps whether we like it or not the cultural desire for bigger government that does more to help us isn’t fiscally sustainable. But maybe it is. That’s why a tax summit entered into in good faith is a must.

It was honourable that the Opposition Leader’s budget-in-reply speech zeroed in on the need to do more for those Australians in aged-care facilities. The royal commission said so and the government hasn’t done well enough enacting its recommendations. But that’s just one piece in the bigger puzzle of how Australia remakes itself. It’s time we widen the debate.

My fear is that if the government wins the election, it has no agenda beyond survival; and if Labor wins, it won’t be bold because it can’t be. A small-target campaign crimps what it can do on the other side. Morrison gives me little hope the government can pull itself out of this situation because he’s just a marketing guy who sees winning as an end in itself. Anthony Albanese is so much more than that, I just don’t know if he’ll live up to the belief I have in him. Maybe we’ll find out in the election’s aftermath.

Peter van Onselen is a professor of politics and public policy at the University of Western Australia and Griffith University.