Election budget fiddling

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This budget won't produce much memorable commentary because there was little memorable about it.

Budget discarded among the stampede towards the election. Cartoon by Chris JohnstonWhen the history of May–July 2016 is written it will be forgotten and all interest will be on the 2 July election. The most memorable budget, which will define this Coalition term, came two years ago in 2014, when its first budget was a disastrous flop.

There weren't even any great surprises this time as almost all of the Budget was leaked and could be read about in the papers on the previous day. Commentators were able to draft their responses 24 hours early and didn't have to change much afterwards. It will all soon disappear into the maw of official election campaigning.

It was a political budget, of course, as all budgets are in the sense that winners and losers are often decided by political calculations. But it was political in a special sense this time given the forthcoming election. It had a special urgency.

It turned out to be neither an election-winning nor election-losing budget. It was more continuity than change. In that sense it probably was the best the government could hope for given the nation's economic and financial circumstances. However it falls far short of the sort of budget that might have been expected from a prime minister like Malcolm Turnbull whose image is one off a 'big picture man'.

It was in no way a visionary budget in that it avoided the bigger questions of taxation reform and redistribution, while continuing previously announced huge cuts in areas like foreign aid. Where it did take some steps they were cautious rather than bold ones.

Essentially the steps were fiddling, where small cuts were made in order to fund small gains for people at roughly the same socio-economic level. There was not much evidence of a coherent plan despite the promises by Treasurer Scott Morrison, who now has to sell it.

On taxation questions, like the treatment of superannuation concessions, it may have taken the edge off any possible Labor advantage in the election campaign by taking sensible steps to eliminate some of the unfair advantages to high income earners. But it avoided big questions like tackling negative gearing and capital gains taxes despite widespread popular and expert encouragement to do so.

 

"There was not much evidence of a coherent plan despite the promises by Scott Morrison, who now has to sell it."

 

This is not to deny that it is essentially still a Coalition budget. It leant towards traditional Coalition voters, like small business owners and taxpayers with taxable incomes just above $80,000. It stuck to already announced drastic cuts in areas like foreign aid.

The welfare sector was not really freshly outraged by failures to assist the most disadvantaged, such as those on totally inadequate unemployment benefits, because it was what it had expected. Their reactions were full of resignation and disappointment rather than anticipation of a successful fight.

This was a budget produced by a government that has calculated that the election is theirs to lose. That is, their interpretation of the state of play clearly is that the even balance in the current public opinion polls means that they will probably scrape back into government with a reduced majority if only they can avoid any major stuff-ups and project an image of moderate competence. Labor has a long road back still to completely rekindle voter confidence. It may do so but it remains unlikely.

That is not to say that there will not be plenty of fodder in this budget for the election campaign. Within the tight limits of the usual major party election competition Labor still has the opportunity to project itself as the greater champion of fairness and even of innovation and forward thinking. It will still be the party of greater new spending on education, for instance.

But as usual the question will be how brave does Labor want to be. It remains afraid of reinforcing an image as the big spending party and this will limit its options when it frames its campaign pitch.

 


John WarhurstJohn Warhurst is an Emeritus Professor of Political Science at the Australian National University and a former chair of the Australian Republican Movement.

Original artwork by Chris Johnston

Topic tags: John Warhurst, Budget, Scott Morrison, Malcolm Turnbull, Election 2016

 

 

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Existing comments

The point is that it wasn't really a "Budget" at all: THAT will come after the election. As a budget, it was an illusion: there was not a single piece of legislation presented to the Parliament -- let alone passed -- as a result of last Tuesday night's performance by Mr Morrison. Of course the miserly attitude towards foreign aid was disappointing; and the self-interested approach to the "negative gearing" is blatant; the "Co-payment by stealth" is deeply troubling and may yet produce grief for the Coalition; and whether such proposals as the winding-back of superannuation concessions will last any longer than Mr Abbott's "unity-ticket on Gonsk" in 2013 is a legitimate question. Time will solve the speculation about the opinion polls, as it always does; even so, they are (with the striking exception of the Fairfax IPSOS poll) remarkable consistent in their 2PP predictions: when pooled they represent more than 12,000 responses, making their "standard error" (or "margin of error as journalists term it) vanishingly small. The point is that NEITHER side can be especially confident -- and an exhausting 8-week campaign (with its magnified risks of mistakes, miscalculations and "slip-ups") faces them all (and us).
John CARMODY | 06 May 2016


John Carmody has rightly pointed out the big problem with this budget, it actually isn't a budget, it's what comes after an election that returns the coalition that matters and we can only guess at that. Abbott and Hockey promised no cuts, then after the election broke those promises, Turnbull and Morrison shown us the rainbow but not told us what cuts they will implement on schools, health, education, or the environment once they get back with a majority in both houses. Abbott was a crass fool. Turnbull is a silver-tongue, but the Coalition's ideology has not changed nor has its intention to tear down what is left of our commonwealth and replace it with a dog eat dog market societyless economy.
Ginger Meggs | 07 May 2016


I am sick of the characterisations of the free-market economy such as Ginger Meggs makes. Yes, there is undoubtedly competition. It may be fierce but it is never violent. Properly applied the free-market means the free exchange of goods and services between individuals or groups. You exchange or withhold your money, goods and services as you judge is in your best interests. What is inherently violent in that? Nothing, I would suggest. I would need Ginger Meggs to develop his thoughts further, but I suspect that he actually does not fear a “societyless” market so much as a “stateless” market. He seems to think that humans cannot be left to organise themselves and conduct their economic affairs fairly, cordially and cooperatively. They must have the state regulating what they do lest they tear themselves apart. History shows very clearly that those citizens whose states exercise a strong hand are more likely to experience violence than those where the state exercises a light touch. I much prefer the unhindered market to guide who will provide society with what goods and services rather than have it directed by some supposedly omniscient, omnipotent, benevolent state regulator. This is too much power in the hands of a few and inevitably leads to corruption and oppression.
Gerald Lanigan | 09 May 2016


Gerald, you make life sound like survival of the fittest in some sort of "Lord of the Flies" worldview. Hope not.
Brett | 09 May 2016


Brett, please point out what I said that led you to think I see life to be like "Lord of the Flies". I argue for the exact opposite. People should not be forced to do anything against their will. Hence, I am deeply suspicious of governments legislating to engineer a particular social outcome, no matter how desirable it may be. Without ever thinking that we will attain a perfect society, I trust that there is enough good will amongst people that we will help the disadvantaged without having to be 'legislated' in to it. The only survival of the fittest I agree with is when it comes to businesses meeting the demands of the market. The market is nothing other than what consumers need or want. If someone goes out of business because someone else provides a better product at a better price then that's consumers exercising their free choice. Coercion starts when governments regulate to tell consumers, employers or workers what they can or cannot do. For example, recently a state government legislated penalty rates so high for Sundays that many businesses did not open. The government took away the choice of individual workers to negotiate their own conditions with their employers.
Gerald Lanigan | 10 May 2016


Turnbull's mob are keen to not only GROW THE PIE, but GREEDILY DEVOUR THE PIE. The notion of TRICKLE DOWN ECONOMICS is the smoke screen repeatedly trotted out by the BIG END OF TOWN, BUT I DON'T BUY IT. NOR DOES POPE FRANCIS! PLEASE READ HIS ENCYCLICALS.
Grant Allen | 10 May 2016


Okay Gerald, I'll take back "Lord of the Flies" if it offends you although I do see the comparison when you talk about individual workers attempting to negotiate their own conditions. As for "survival of the fittest", that is what your description of the free market is all about so I won't take that one back and I take it you have no objections to the market leading monopolies/duopolies using their position(s) to influence the market in any way they like. For example, in your world why should the two big supermarket chains be restricted from forcing uneconomic prices onto suppliers, or from operating in any noncompetitive way at all for that matter, if that is what they freely choose? Surely the market will adjust and the weaker links will go out of business. All fine and dandy in theory for those with the economic clout but the real world does not operate that way.
Brett | 10 May 2016


Gerald, your 'free market' is a myth, it doesn't exist in real life except in primitive societies where everybody has the same information and the same options. In practice, the 'free market' leads inevitably to monopolies and duopolies like our supermarkets who use their power to screw suppliers, small competitors, and customers alike. Another example is the abuse of parent 'rights' to exclude competitors and rip off consumers, think pharmaceuticals. Think also about the whole obscene game of transfer payments to evade paying tax where it has been earned. But you have exposed the real problem with the way the market works in your own post where you talk about everyone -and that includes big amoral corporations - making decisions on the basis of what is in their best interests - the myth that the common long term good is best served by the collective effect of individual short term greed. An economy is not a society, society comes first, the economy should be there to serve society,
Ginger Meggs | 10 May 2016


Oops, my lat post should have read 'abuse of patent 'rights', not abuse of parent 'rights'. My apologies.
Ginger Meggs | 11 May 2016


Ginger, I will never understand how it is that people who favour state control of the economy think that amorality, self-interest and greed only exist amongst those that run big businesses or multi-national corporations. They think that those who seek public office won't be prey to the very same human instincts that they so readily believe exist amongst the captains of industry. Daniel Hannan, the conservative British MEP, wrote, "Greed—that is, the desire for material possessions—is not a product of markets, but a product of a human genome evolved in the competitive environment of Pleistocene Africa. Capitalism harnesses greed to socially productive ends. The way to become rich in a free economy is to give others what they want, not to suck up to those in power." We are still always free to give to those in material distress. Indeed, the Christian faith urges us to do so. But this is a world away from a statist solution to social ills which always uses coercion to enforce its diktats. Whatever imperfections exist in the market economy, I will always prefer it to a state controlled one. The market economy devolves power to each and every individual to conduct their economic affairs as they see fit. This is infinitely preferable to the greatest monopoly of all, i.e. the state.
Gerald Lanigan | 13 May 2016


Gerald, I have never advocated a 'state controlled economy' if by that you mean the absolute control by the state of all economic functions. The 'cocoon from the womb to the tomb' society is no more desirable than your 'collective effect of individual greed' economy. There is a (very large) role for markets to play in the economy of my preferred society but there are also roles for government to play in regulating those markets and also for directly providing facilities and services that the market will not provide, or not provide in an equitable and just manner. Greed certainly influences politicians as well as the owners of capital, but at least we can vote them out, something we can never do to those who control capital. And there is also a role for the voluntary sector in strengthening community, especially at the local level, in my preferred society, but the disadvantaged in that society have a right to the support of the community as organised though the state and should not have to rely upon the largesse of those who give selectively to their favourite charities who are just as capable as the state of using coercion to modify behaviour, except that the preferred behaviour is typically religiously prescribed.
Ginger Meggs | 14 May 2016


Gerald, I think you mistake opposition to your libertarian economic theory as support for centrally planned economies of the kind that failed in Eastern Europe a couple of decades ago. There is a bit of exaggeration and quoting Daniel Hannan hardly provides balance to your views. “Capitalism harnesses greed to socially productive ends”. Nice try, but it ain’t necessarily so. Greed will go in whatever direction the unrestricted libertarian market would let it. We live in a society as Ginger Meggs said, which should be served by the economy. Societies have laws that establish the framework within which we live, work and play. Why should “the economy” not also be regulated? Our market economy has flaws. Some do very well, others will struggle most of their lives, but with some government tweaking it is about the best we can do. It is not “a statist solution” using coercion to enforce its diktats (how very communist) to support those who need it while allowing others to succeed to their maximum legal advantage. The market does not show greed, amorality or any human trait. They belong to people. The legal framework is there for a good reason. I would prefer government regulation as we now have it, to individuals conducting their economic affairs as they see fit. But I imagine the big supermarket chains would love your worldview.
Brett | 14 May 2016


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