Australia, enjoy your five minutes of surplus sunshine

Australian Prime Minister Anthony Albanese (right) listens to Australian Treasurer Jim Chalmers speak to the media at Parliament House in Canberra. Picture: AAP / File

Today the Prime Minister said his government would “pay down debt” with the surplus Treasurer Jim Chalmers will be handing down this evening.

Anthony Albanese also highlighted the economic importance of doing so, claiming “we inherited a trillion dollars of debt”.

First of all that figure is gross debt not net debt, a deeply misleading way of approaching the issue. Economist Chris Richardson has talked about the deceit of this narrative. The net figure – the one that matters – is substantially lower, albeit still high enough to warrant structural budget repair. Not that structural repair underpins tonight’s surplus. It’s driven by factors largely unrelated to government decision-making: immigration and commodity price rises, for example.

Secondly, Labor bequeathed approximately half that total debt to the Coalition when losing government back in 2013. Then of course Labor supported the spending during the pandemic that saw the debt bill continue to rise. So the public debt the nation is burdened with is bipartisan. Both major parties need to own the shame of it.

But what are we to make of the claim that paying down debt is important to the new government? To learn the truth on that score it will be important to see what Labor’s spending patterns are in the out years of the budget. The Treasurer has already indicated that the budget will soon return to deficit. That’s likely to underpin the answer.

The five minutes of surplus sunshine we’ll see tonight is likely to be a once off. And even then we are talking about a low single digit surplus. If paying off so much debt was really an important goal, why bake in exploding recurrent expenditure going forward? Yes Labor claims it is addressing that problem, but it is tinkering at the edges rather than solving it. Why shun tax reform and federation reform which could help restructure the efficiency in the system? Weakness is your answer.

What today’s debt and surplus rhetoric really speaks to is mere superficiality. Just watch as spending grows, the debt burden grows and reforms to ensure future prosperity get put in the politically too hard basket.

This is modern politics at its depressing best. The government is more interested in longevity than reform. Survival comes first.

The problems with the budget and our tax system are certainly not all Labor’s fault. Its economic management is as unimpressive as that of recent conservative governments. The Coalition is no better, arguably it’s even worse. Both major parties are too timid to do what the nation needs – what the likes of Paul Keating, Bob Hawke, Peter Costello and John Howard all did early in their time in government.

You don’t need rose-coloured glasses to see the difference.

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