Extract from The Guardian
The
Coalition has changed its tune on debt and deficit, but the budget
shows no ambition beyond pretending everything worked fine before Covid.
Treasurer Josh Frydenberg delivers Budget address in Canberra this week. “We have gone through a once in a century experience ... and yet I don’t really detect any change at all from this government.”
Last modified on Sun 16 May 2021 06.06 AEST
As I waded through the turgid words barely replicating prose that was the treasurer’s budget speech, my immediate thought was that I have no idea what this government is. It is big spending, but with little purpose. It talks about vision, and yet it can barely even see as far as the next election.
There, of course, was spin. Marketing is the foundation of the Morrison government.
My favourite was the treasurer announcing in his speech that “over 10 million low- and middle income earners will benefit from a new and additional tax cut”.
It will be the first tax cut no one notices because all it is doing is extending for one more year the low-and middle income tax offset (LMITO).
It’s a bit like your employer saying that continuing to pay you the same amount for another year is “an additional salary”.
It would seem the government is so in love with casual labour contracts that they are now extending them to how they do tax cuts.
Of course, not everyone has to worry about whether their tax cut will continue.
Those earning over $120,000 already were granted a permanent tax cut last year, and the stage 3 tax cuts which seek to flatten the income tax system and hand those earning $200,000 a 4.5% tax cut remain in place to begin in 2024-25.
It’s one of the reasons why there are many years of deficits to come and that, to be honest, no one cares – least of all this government which has long pretended to argue such things are evil.
But it’s why this budget despite being big spending had no real purpose other than to get to the next election. It felt like a tick-the-box budget, designed more in a media monitors office than the Treasury department.
Worried about women? We got you covered (if you think childcare is a women’s issue). Worried about aged care? Finally we are doing something. And hey, that vaccine? Don’t worry, another $1.8bn will be spent and we’ll slip in the assumption underlying all the forecasts that “a population-wide vaccination program is likely to be in place by the end of 2021”.
Likely.
Go to university or are a migrant thinking you might need benefits in the next four years? Errr … sorry, we’re pretty sure you’re not voting for the government so … too bad.
Worried about climate change? Yeah. Nah. You definitely are not voting for the government.
So even with all the big spending, the government still found time to be ideological, even if its ideology is mostly one of rewarding those who support them.
It was a budget that acknowledged that governments need to spend to keep the economy going and yet looks with hope for a time when it can reduce its spending – a time the government appears to think will be when the Reserve Bank still has interests rates at emergency levels.
As ever the Reserve Bank will be expected to the do the heavy economic lifting while the government gets to boast about how it is returning to surplus.
It’s a bit like lying on the couch all Saturday marvelling at how great it is to have finished work, while your partner is vacuuming and the washing the floors.
And moreover the government wants to cut the deficit (which removes demand from the economy) as hard and quickly as occurred during the 1990s when the economy was growing much faster.
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We have gone through a once in a century experience – a truly life-changing experience – and yet I don’t really detect any change at all from this government.
It has discovered that fiscal stimulus works and that debt is not as scary as they have long been saying. And yet my main impression is that it quickly wants us all to forget that and get back to pretending that what it had been doing before worked, and that things before were all fine.
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