Treasurer Josh Frydenberg’s federal budget to put focus on recovery strategy

The federal budget is unlikely to contain big pre-election giveaways, with the Treasurer’s eyes fixed on recovery from the pandemic.

The federal budget is unlikely to contain any big pre-election giveaways next month, with Josh Frydenberg planning to steer the emphasis towards a wider fiscal strategy for recovery from the pandemic and concentration on the Coalition’s key themes of economic management and national security.

While it is expected there will be some initiatives in the budget, and at least one more announced before March 29, the scope is limited by the money available and the need to address long-term problems while “normalising” the economy.

Amid Treasury warnings that while the unprecedented $337bn fiscal stimulus and job support phase is coming to an end, there will be years of deficits and an “austerity” budget could stall the recovery, the Treasurer will soon deliver a major speech outlining the fiscal strategy for the nation’s economic recovery.

For the past two weeks, the Morrison government has directed a political attack on Anthony Albanese and Labor over taxes and economic management but will broaden its campaign in coming weeks to promote its own plans for a post-Covid recovery.

As parliament rose on Thursday for the five-week pre-budget break which will mark the beginning of the leaders’ 2022 election campaign on the road, Scott Morrison declared the Coalition’s economic strategy was about “jobs, jobs and jobs” when 12,900 new jobs were created in January.

“Jobs have been our response to this pandemic,” the Prime Minister said. “We have seen the ­labour force continue to grow. We have a million more women in work. We have the lowest rate of unemployment amongst women, at 4 per cent, that we’ve seen in a generation. We have unemployment for those young Australians down to 9 per cent.”

But over the next five weeks as the expenditure review committee finalises the budget there will be more emphasis on future economic management and Mr Frydenberg will develop the themes of locking in the post-pandemic recovery, strengthening national security, addressing the cost of living, creating jobs and skills, and building infrastructure.

As before the last budget, Mr Frydenberg will deliver a major economic speech setting the parameters and expectations for this year’s budget. And as in 2019, the election will be called within two weeks of the budget for a May 7 or 14 poll.

The political danger of appearing to be cynically buying votes, the need to start to address the long-term problems of debt and deficits and a tight limit on money to be spent means the budget will have few pre-election giveaways.

Of the so-called $16bn election war chest of “unannounced spending”, about half has already been committed but not revealed. Most of the committed money is related to Covid-19 measures, such as vaccines, which remain commercial in confidence.

Mr Frydenberg has also started to appeal to Coalition supporters who are concerned about record job support spending during the pandemic and the looming $1 trillion in national debt.

The Treasurer said last week: “It is now time to draw some clear lines in the sand. Now is the time to start confidently moving back towards normalised economic settings.”