Extract from ABC News
Analysis
Back in the day, we had Howard's Battlers and Tony's Tradies.
Without wanting to encourage any more political cliches, a live question after the 2020 Budget would be: How would you describe Scott Morrison and Josh Frydenberg's tribe?
As the Treasurer told us on Tuesday, the Budget "is all about jobs", and "the Morrison Government's message to Australians is that we have your back".
The Government has punted everything on a private sector-led recovery out of recession; one that will happen both really, really quickly and dramatically enough to offset the huge disruption just about to start as businesses lose JobKeeper support for their workforce, run out of rent and bank payment holidays, and decide to close their doors.
The Budget forecast is for the economy to be more or less back to the level of activity it was before COVID-19 hit by the middle of next year. That looks like some feat.
Given this grand ambition, there are some perplexing political — and policy — choices in the Budget which scream ideological purity over rational decision-making.
Josh Frydenberg spoke of "providing a helping hand to those who need it", yet so much of the Budget is actually directed at people, and sectors, who don't need it.
The most obviously perplexing political decision is that the Government has not only abandoned such a large swathe of its own small business base, but it has constrained the chances of it taking part in the promised recovery.
Suffering in services sectors
There has been lots of talk about tradies in the past few weeks. There's nothing the Coalition of the last couple of decades has loved more than the tradie. But it has not been tradies who have suffered the worst of the economic downturn. Construction and mining, for example, have until now kept turning over.
It is the myriad small- to medium-sized businesses in the services sector that have been hit conspicuously hard.
True, some have been able to alter their business models. But it is more than just the cafes and restaurants in CBDs that are affected by the flight from offices. It is more than just low paid workers in those places.
It is all those other small businesses that rely on people being out and about on the streets, or travelling around the country for business or pleasure.
Investment tax breaks don't help any of them, nor do wage subsidies to hire extra workers — at however low a rate — if your turnover is struggling to reach pre-COVID levels.
It seems extraordinary that the party that's supposedly the party of small business is simply abandoning all these businesses to the liquidators — particularly, as the Treasurer so often repeated on Tuesday night, as they found themselves in this situation "through no fault of their own" but as a result of deliberate Government policy in response to a health crisis.
As the Grattan Institute points out, "the worst fallout in the COVID-19 recession has been in services sectors".
"Hospitality, the arts and administrative services have all been hit hard. Yet these sectors received next to nothing in the Budget. They are also less likely to benefit from economy-wide supports such as instant asset write-offs because they are the least capital-intensive sectors."
These sectors all have large female workforces, which is one of the reasons why Labor and others are attacking the Budget's failures to support women.
The public sector largely misses out
But a broader point is that the Government's apparently obstinate determination to be seen to push all its support through the private sector also means ruling out something obvious: like spending money on jobs in the public sector, even when that must constrain its chances of getting the economy going again, and/or hitting its jobs target.
It's not as if it isn't prepared to spend money in the public sector per se. Defence, intelligence services and law enforcement are all getting big lifts in spending.
And you don't just have to hire a whole lot of "pen-pushing" public servants — as the Coalition seems to regard the entire public service — to boost job numbers.
The very sectors that conspicuously need more staff — and the fastest growing parts of the workforce before COVID — are in the public sector, in areas like aged care, disability care, health, education, mental health, employment services and child care.
The Budget included some money for most of these sectors, yet nothing on a scale similar to the direct and indirect support for areas like manufacturing and energy, nor with any of the transformative ambition.
The Treasurer said in the Budget that eight out of every 10 jobs were in the private sector. Yet public administration and government represents about two million workers.
The community and charities sector accounts for another 840,000 full time equivalent jobs. That covers jobs in industries from child and aged care to domestic violence and homelessness, disability services and mental health.
But there is nothing material to support these sectors, even though the Australian Council of Social Services released a survey in September showing about a third of organisations had frozen recruitment and 20 per cent had reduced staff hours.
It also foreshadowed 21 per cent would need to cut jobs when JobKeeper support ends.
Happy to 'bake in' tax cuts, but not spending
The Prime Minister told 7.30 on Wednesday night that the Government didn't want to "bake in" spending over 10 years in response to this crisis as some had done in the past (i.e. Labor after the GFC).
But he was more than happy to "bake in" income tax cuts, which are regarded by economists as of dubious value as a stimulatory measure in the broad, and which reduce the revenue base with which to reduce eyewatering levels of deficits and debt in the medium term.
Even initial suggestions that backdating the tax cuts — which were passed by Parliament on Friday — might produce some upfront cash in hand in the next few months turned out not to be the case. The backdated tax cuts between July and now won't be paid until you lodge your return (just before a likely election).
And because the low- and middle-income tax offset will be withdrawn next year, all that Budget night talk about most of the benefit going to lower income earners is also bunkum beyond this year.
Most of the benefit will go to higher income earners, who tend to save (or reduce debt) rather than spend tax cuts.
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