Scott Morrison’s first budget, delivered last Tuesday, was the Turnbull government’s opportunity to grasp the nettle and finally lay out a narrative about what it stands for and where it plans to take Australia if elected on 2 July. Mr Morrison and Malcolm Turnbull have produced a budget that will not lose the Coalition the election, but won’t win it either. It is safe, cautious, and largely uncontroversial politically. Mr Turnbull and Mr Morrison want to lay the ghosts of the disastrous 2014 budget – to which they were party as Cabinet members – subtly blaming those nasty barbarians Tony Abbott and Joe Hockey who inflicted it on you.
Unless you’re a smoker, the worst pain is inflicted on the Liberal party’s well-heeled and big corporate supporters. The ‘Google tax’ on multinational companies not paying fair shares of tax on their Australian-derived income, and the crackdown on superannuation concessions for the highest earners and biggest savers, are popular with those who won’t have to cough up for them.
Middle Australia, on the other hand, was largely spared pain, but it wasn’t showered with gain in the fashion of election budgets. The great thing about Mr Morrison’s fiscal fandango is he resisted the political temptation to trump Labor’s high-spending promises with even bigger ones. The line on negative gearing was held, and the Coalition has significantly underbid Labor in the electoral happy hunting ground of schools and hospitals. In running this political risk Mr Turnbull, Mr Morrison and finance minister Matthias Cormann are banking on the electorate accepting the days of election campaign splurgefests are over, and voters’ heads not being turned by Labor’s promising everything plus the kitchen sink, soak the rich and spend up big populism. We suspect they are right, but that hasn’t stopped the Coalition indulging in some big spending of its own.
Mr Morrison’s ‘twenty-year defence industry plan’ is nothing more than an expensive job creation scheme largely aimed at Saving Private Pyne from Nick Xenophon’s political hunter-killer submarine in rustbelt South Australia. That new warships and submarines could be designed and built more cheaply elsewhere, still with significant Australian participation, wasn’t the issue: shoring up marginal seats is. Such old-fashioned protection of inefficient and dying industries belongs to the big government conservatism of the Menzies years, not today.
Billions of dollars thrown at infrastructure schemes around the country are likewise targeted at marginal Coalition seats. These projects may be necessary, even popular, but hardly ‘living within our means’. And while the budget’s measures around bracket creep and company tax relief for incorporated small businesses are welcome, those superannuation changes send mixed messages to the Coalition’s middle Australia base – most especially the unexpected $1.6 million cap on untaxed superannuation balances. While marketed as hitting the high-rollers, not Mr and Mrs Average, these still send a message to voters that if you work hard to provide for your retirement the taxman is always waiting for you; and the constant tinkering with the tax treatment of superannuation creates confusion in the minds of voters who want certainty in their retirement planning. Risky politics.
Where this budget really is a letdown, however, is in failing to make any headway against government’s chronic spending addiction. Next financial year, the federal government plans to spend a whopping 25.8 per cent of GDP, a share of national wealth unrivalled by the Rudd, Gillard even the Whitlam governments. On budget night, Mr Morrison boasted of reducing that share down to a miserly 25.2 per cent over the next few years: what twaddle. A Liberal government that taxes and spends our hard-earned with such enthusiasm is not worthy of the name.
The same goes for the budget deficit. The government eagerly pinched Labor’s heartless tobacco excise slug on the smokers who won’t or can’t quit, but its borrowings still dwarf what the Coalition inherited from Labor in 2013. Granted, the Coalition was locked into massive Labor forward commitments that couldn’t be undone, and from the 2014 budget onwards Labor, the Greens and crossbenchers in the Senate repeatedly have frustrated the Coalition’s attempts at fiscal restraint. But at least Mr Abbott and Mr Hockey tried: Mr Turnbull and Mr Morrison merely have shrugged it off, naively hoping a double dissolution cures all.
By indulging in a little Keynesianism, and shamelessly pinching popular Labor policies on super and tax avoidance they couldn’t counter, Mr Turnbull and Mr Morrison have produced a Labor-lite budget. It isn’t profligate in the manner of Mr Shorten’s lot, but still taxes too much, spends too much and doesn’t do enough to set the nation up for the next decade of economic and global uncertainty. That the Coalition is being more responsible than Labor is hardly a ringing endorsement, but with opinion polls so tight, it will have to do.
The Treasurer has delivered a budget his Labor predecessor would have been happy with. Scott Morriswan?