On Tuesday night, Treasurer Scott Morrison handed down his third Budget since being appointed in September 2015. In it, he promised a return to surplus in 2019/20, with surpluses of $11Billion and $16.6Billion in the following two years. The $2.2Billion surplus projected for 2019/20 comes from a favourable MYEFO, resulting in an unexpected windfall of ~$30Billion. The Treasurer is claiming that the unexpected windfall is due to the Coalition’s economic policy, but the reality is that the relative prudence of the Coalition in terms of policy only augments favourable global conditions.
While it is technically correct to say that almost a million jobs have been created since September 2013, what has been omitted is that the increased immigration intake has offset any real reduction in unemployment levels, thus benefits have not been seen by most.
While acknowledging that the benefits of a stronger economy are “yet to reach everyone”, the Budget speech seems to do nothing to ease the burden of the cost of living for most. There was rhetoric about reducing cost pressures on households regarding electricity prices, but the only thing that might indirectly effect this is the (correct) decision to reject Labor’s demands for a Renewable Energy Target of 50%, which would certainly increase the price of electricity for consumers.
Infrastructure got some well overdue investment, as well as a boost in the form of a new $1Billion Urban Congestion Fund, to tackle gridlock in our major cities. There was also a new “Roads of Strategic Importance” initiative announced, costed as $3.5Billion, as well as a promise for continued funding for the Building Better Regions Fund.
In addition to the sweeteners handed out to baby boomers in the form of increased numbers of home care places over the next four years, there was announced a new “Skills and Training Incentive” for mature aged workers to upgrade their skills.
Schools got a boost of sorts, with this year’s funding alone to the tune of $18.7Billion, with a projection of $30Billion per year in 2027. In addition to all of the other announcements, the Treasurer is claiming that “we are no longer borrowing money to pay for everyday expenditure such as welfare payments”. While the veracity of that claim is yet to be determined, one should remain very sceptical of such a grandiose claim, given that if it were not for the unexpected $30Billion windfall in revenue, we would be a lot worse off than we are now.
Opposition Leader Bill Shorten gave his right-of-reply Budget speech on Thursday evening, which despite Labor’s lack of mention of Border Security, seemed to go down well with the electorate at large, due to not only the heavy rhetoric about Big Business, the Banks, and the Environment, but also the announcement that Labor would not be giving $80Billion as a tax break to multinationals and big corporations.
However, the Opposition Leader and the ALP have done the same thing that the Government has done, which is defer costs over the next few years to avoid plunging the balance sheets into red. In the words of one economist, “No recognition of the biggest global financial bubble in human history or the biggest domestic structural imbalances in Australian history!!”.
People are right to be suspicious of the major parties’ Budget plans for Australia, because at the end of the day, it does not seem that anything is being done about the imbalances within the economy, and neither speech outlines anything to significantly increase our purchasing power. Even in the best-case scenario, where the economy continues to grow at 3.75% per annum, wage growth is still less than inflation, bills are still going to increase as a share of our incomes, and rent/mortgage stress will be exacerbated even further for households.
Dare we ask what happens in a less than best-case scenario?