Surpluses are coming, they said. “I announce the Budget is back in the black and Australia is back on track!”, Treasurer Frydenberg cried. But now, the real games begin. As the media widely commented today (and rightly so) – this is the election that could spring board a brilliant comeback for the Coalition or sink its hopes deeper than the Titanic.
Tonight, a Treasurer who has only been in the job since August has just delivered the most important performance of his political career. I can’t recall the fate of a political party resting so much on one speech. Then again, I’m young so maybe you can remember an instance better than me.
Let’s start with the political wins that the government chalked up for itself. (Apart from the well rehearsed performance at the despatch box, that is.)
- They got the surplus! (Well supposedly.)
After 12 years in the wilderness, the coveted budget surplus will return in 2019/20. After this $4.2 billion deficit year, the Budget is forecast to see green again. Hurray!
All credit to the Treasury people, who did all this with a month less than usual by the way.
Nonetheless, the overhead numbers look solid – a $7.1 billion projected surplus for 2019/20. Tens of billions more to come after that as long as said projections are correct. It’s a diet started and actually kept, as long as those projections are still standing in the medium term and nothing drastic has changed that since.
PROJECTED, FOLKS. PROJECTED. (It’s NOT here yet!)
2. More For You!
Nonetheless, it’s a classic pre-election budget. If it puts more money in your pocket, it’ll buy your vote. One-off payments of up to $125 are being promised to help cover the cost of energy bills for some of our most vulnerable citizens.
Edit: And now, including those on Newstart. This backflip took less than 24 hours, must be a new world record.
Tax cuts are also in play (surprise, surprise) … the largest they claim since John Howard was Prime Minister. Tax breaks have been doubled to about $1,000 for those earning between $48,000 and $90,000. And everyone earning between $37,000 and $126,000 are winners anyway in addition to the tax cuts passed down in 2018.
“Taxes will always be lower under the Coalition,” he said. We’ll hold you to that.
3. Wins in Infrastructure (big), Health (modest but not enough), Security (pretty good)
There’s more money going to the above industries. $100 billion more in the next decade (again as long as nothing else goes wrong). In the next year, $7 billion alone will be spent on major infrastructure projects in Victoria and another $1 billion + is off to WA. $3 billion more is off to the Coalition’s so-called “congestion busting” program – and as someone already worked out, most of that money is off to marginal electorates where the election will be won or lost.
Especially Michael Sukkar’s Deakin electorate: this May, he’ll be defending a 55-45 two party preferred vote.
OH: I get it now, Hans! And yes – you’re right. The earmarked money is off to WA and Victoria: two states that the Coalition will be keen on holding off from Labor if it’s to really dent its aspirations of government. Fast rail, anyone?
Speaking of winners, the NDIS is going to get more as will cancer research and a multi-year commitment to the National Drug Strategy. $460 million is going to mental health too. However, the NDIS still needs a lot more money to fulfil all its obligations. And there’s half a billion for a disability Royal Commission — announced tonight after two years of calls from the Opposition to make it happen.
Almost as much in health spending will be dedicated to our borders – the airports alone will get nearly $300 million and ASIO will get more too. Although I personally am not a fan of giving them more money until they can prove that their agents have this tool at their disposal:
BUT – watch the outlook, folks. The numbers may be rosy now but they haven’t always borne out by November when the mid-year report card is released. To prove it, Andrew Charlton at AlphaBeta (also Kevin Rudd’s former economics guru) came up with this:
Now if Mr Frydenberg’s projected surplus is correct, and taking this average ($2.7bn) into account: they should be fine. Having said this – last year, they were $8 billion out so anything really can happen. But no voter will be thinking that far ahead, right? If budget discipline is really a priority, this is the litmus test.
Oh and one other note: they haven’t mentioned a glaring problem in the nation’s finances in tonight’s speech. Australia has a federal debt bill of $370 BILLION. Government debt to GDP has more than doubled in the ten years to 2018. In fact, if that $370 billion figure stands, it’ll take us until at least 2029-30 to pay it off. That’s providing of course there are no recessions, no major blips in private investment etc.
Or to put it more simply:
But there are the facts – and there are the numbers. A surplus projection that’s six years late – but at least it’s here. Debt’s gotta be paid down but the tax cut sugar hit has been laid (and laid down big time). Now it’s over to you.