What can we expect from a 'pretty dull' budget?
This week saw the end of the first sitting period of the year. Politicians for the most part can vacate Canberra, returning in May for budget day on 12 May. But it's not exactly a break for the Treasurer and Finance Minister, as they work to put together a budget that will somehow be politically saleable and economically sensible.
Watching leaks come out of the cabinet over the past couple of weeks has been a fun game. The latest one on Monday regarding cuts to foreign aid quickly had the Foreign Minister Julie Bishop on the front foot, and even more quickly had Mathias Cormann ruling out any cuts.
It led to the best amateur theatre parliament has seen for a while. Julie Bishop rolled her eyes and shook her head in disguest when Joe Hockey referenced Fraser's creation of the expenditure review committee when eulogising the former prime minister in parliament.
For a politician who knows exactly how to use images and where the cameras are in the House of Representatives, it was a fairly unsubtle performance.
But the kerfuffle over foreign aid has brought to the fore a pressing issue for the Coalition: namely, that with just seven weeks to go, the government has done a pretty poor job thus far of indicating what we can expect in the budget.
Such concerns are not just limited to those in the media, who by this stage are getting into full budget-leak mode, but also Hockey’s Liberal-National party colleagues.
He sought to diffuse the issue with a speech on Tuesday to the joint party-room which provided some broad brush strokes – and also some power point slides.
The slides give away some hints as to what we can expect.
The first slide suggests “The focus of the 2015 budget will be to build a stronger Australian economy”.
One would hope so.
But then we get to some detail. Hockey suggested that the focus of the budget would be on “jobs, growth and opportunity”, and in doing so there would be specific measures including a “small business package”.
The expected package is nothing very new – it has long been in the Liberal Party’s commitment to provide a 1.5% tax cut to small business. But this was also tied up with the 1.5% levy on large businesses to pay for the now dumped paid parental leave scheme. Already, there is pressure for that tax cut to be dumped as well.
The second specific policy was “childcare reform”. This has been on the cards since the Productivity Commission inquiry into the issue. Interestingly, the Productivity Commission was instructed to only recommend changes “within current funding parameters”, but it initially proposed a first best model which would have seen funding substantially increase. The final report proposed a second best model more in keeping with the current funding levels, but it will be interesting to see if the government ignores that and instead provides more funding.
At this point the sense of anything new in the budget disappeared – perhaps to surprise us all on the second Tuesday in May – because the third specific point was “infrastructure investment”. This was something the government tried to make a big deal of last year with its offer to co-fund infrastructure with the states if the states sell off assets to fund the new infrastructure, so unless they have a new plan, it is just more of the same.
The fourth point was “free trade agreements” which is an odd thing to put into a talk about a budget. Free-trade agreements don’t bring in any revenue – in fact they can reduce revenue because tariffs are dropped. Moreover, the benefits are generally just amorphous and widely overstated claims about economic growth over the next decades – not something that fits well within the budget papers.
Hockey ended his list with a policy to ensure “integrity in our tax and welfare systems”. This too has been an old saw of the government – and has thus far largely been targeted at those on Disability Support Pension including suggestions that wannabe terrorists have been abusing the system.
It all added up to a sense of yes, but where are we headed?
The conclusion of Hockey’s speech was that “We will get the budget back to surplus as soon as possible.” Certainly, that is a sensible proposition. Setting time limits on when a budget must get back to surplus are generally very foolish – as Wayne Swan found to his great misfortune.
But given the continual line the government has run regarding the need to pay off debt, it does bring into question whether that remains the number one priority of the government.
Last year, Joe Hockey spent the period prior to the budget crying about a budget emergency and the need for tough decisions. But when the budget was released the tough decisions contained within took voters by surprise and massively failed the sense of fairness test.
This year, despite the release of the intergenerational report earlier this month, there still is a lack of much sense of what Hockey will do on budget night.
The over-abundance of budget leaks in the past few years has become endemic, so no doubt the leaks will come throughout April, but it will be interesting to see what steps Hockey and the government take to frame the overall budget narrative.
At the moment, you can pretty much choose your own – and when that is the case it becomes very tough for the Treasurer to sell to voters that what he is planning on doing is planning on being done for good reasons.