Election Budget Fiddling

5 May 2016

It turned out to be neither an election-winning nor election-losing budget.

John Warhurst is an Emeritus Professor of Political Science at the Australian National University

This budget won't produce much memorable commentary because there was little memorable about it. When the history of May-July 2016 is written it will be forgotten and all interest will be on the July 2nd 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 anyway.

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 which about to be called. So 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 if 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.

On taxation questions, like the treatment of superannuation concessions, it may have taken the edge of 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.

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 enthusiasm for the 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.

This article has been accepted by Eureka Street magazine.