Leading article Australia

Has Josh saved ScoMo’s bacon?

2 April 2022

9:00 AM

2 April 2022

9:00 AM

You may not have guessed it from Josh Frydenberg’s speech, dolefully read at the pace of a 45-rpm record played at 33, but his (final?) Budget will help the Morrison government become competitive against a Labor party that wants to whinge its way into office.

The policy tests for the Treasurer on Tuesday night included fiscal restraint, a coherent plan for reducing Covid’s eye-watering national debt and indeed a coherent centre-right plan for a post-pandemic future. In some respects, Mr Frydenberg did all three. His ‘cost-of-living’ handouts are indeed mostly targeted and temporary, and not the open-ended buck-shovelling of 2020 and 2021. Small business got a good look-in, tax-break wise. Much of the new infrastructure project spending is micro-economically justifiable as well as marginal-seat savvy. Bringing down the deficit as rapidly as possible has been baked into the Budget cake.

Politically, much of this Budget is difficult for Labor to reject before the election, constraining Labor leader Anthony Albanese’s ability to frame his own election promises. Nevertheless, the Budget’s shortcomings cannot entirely be overlooked. In terms of defence and national security, little was done to accelerate force renewal and procurement, not least bringing the Aukus nuclear submarine capability to Australia sooner than next decade. And we are continuing to invest billions in heavy tanks and armoured vehicles – those relics of World War II being blown up and burned out in their hundreds in Ukraine.

There is still far too much projected spending overall, without serious offsets reducing government’s overall share of GDP. Mr Frydenberg has done little to stop the states from splurging on their myriad ‘progressive’ ideological frolics with Commonwealth money. His budgetary assumptions are calculated risks: predicated on very robust growth, optimistic predictions for inflation and interest rates, the Ukraine-linked jump in the price of oil being a spike and not a plateau, and ongoing ultra-low unemployment. If any of these prove too optimistic, the Coalition will finally be toast if re-elected, or – more likely at this point – a Labor government will make Scott Morrison and Mr Frydenberg wear the results like a crown of thorns, while absolving itself of economic mismanagement. And if there was ever a time for announcing a re-elected Coalition government would put a constitutional review of public health, fire and flood emergency powers to a referendum, to ensure that never again will a federal government be hostage to the fortunes of lockdown-happy and instinctively authoritarian state premiers, Tuesday night was it. A missed opportunity indeed.

It was also disappointing to true fiscal and social conservatives that Mr Frydenberg paid too much heed to the ‘Voices Of’ jihad against him and other affluent-suburban Liberal MPs. The opportunity was there to be realistic about the dire international situation and water down, if not totally abandon, the Morrison government’s blundering commitment to net zero carbon emissions by 2050. Win or lose the election, the Coalition will long regret that missed chance to reflect economic reality and re-energise its base.

There was also justifiable business criticism of the lack of macro- and micro-economic reform in the Budget including, surprisingly, by lobby group leaders who are former Liberal staffers and therefore should understand the political cycle. Reform bullets are bitten just after an election, not just before. But whoever wins in six weeks’ time will inherit – to mix metaphors – a poison chalice full of ugly reform nettles that can’t be avoided any longer.

But to those wanting this government – for all its manifest faults and failings – to be re-elected because the alternative doesn’t bear thinking about, this Budget gives hope. Its relatively understated numbers, and even Mr Frydenberg’s funereal delivery, indicate the Treasurer (if not Mr Morrison himself) finally understands the need to purge the Covid-driven mentality that Big Government will do everything for everyone. The pork was more limited than anticipated. Reassuringly, Mr Frydenberg gave the sense that perhaps, just perhaps, traditional Liberal values may be making some sort of belated comeback in the Liberal party. And he gave some indication that Labor may yet be outplayed in the election campaign to come.

As pre-election budgets go, this one could have been much better, but in fairness it could have been far worse – like last year’s awful, profligate, irresponsible effort that was to the left of even Mr Albanese’s meanest mean girl. On balance, this Budget therefore gets a political and economic pass mark. Politically, it gives the government a viable campaign platform that shows a disillusioned electorate it has actually been listening for a change. And, if the government still loses, a victorious Labor cannot weaponise it against the Coalition for years, as the Howard government successfully did with Beazley’s Black Hole in 1996.

Now, off to the polls and let the people decide.

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