Any political junky loves budget week. The rumours, the leaks, the speculation, and the positioning.
What makes a budget week even more interesting is when we are in an election year and the incumbent prime minister is fighting for survival.
As such, the federal budget is often more likely to reflect the political cycle and fortunes of the government than the needs of the nation. When a government is early or mid-cycle, they are likely to push for budget reform and present difficult decisions – while in an election year, the Treasurer is more likely to mimic the Easter Bunny.
In such years, the Treasurer attempts to convince us that this expenditure is responsible, and we should all ignore the fact that someone must eventually repay any generosity. In this way, the headline announcements often mismatch the reality.
While a global pandemic and a war in Europe has ensured that the context of the budget is like no other in living memory, the way the budget has been handled is easily familiar.
Here are five takeaways from the federal budget.
First, the Treasurer is working hard to convince us that he has heard the concerns about cost of living and has responded. Treasurer Josh Frydenberg’s key pitch is, low- and middle-income earners will receive a one-off increase of up to $420 in their annual tax offset through their tax return, while pensioners and other welfare recipients will benefit from the one-off $250 payment. As drivers, we will save, thanks to the 22 cents a litre cut in the excise on petrol during the six months to the end of September.
Second, the Treasurer is pretending to do one thing, but he is doing something else. Below the headlines, what you soon realise is that for most of us, much of what we gain will be recovered by an increase in the income tax we pay. For example, the more than 10 million taxpayers earning up to $126,000 a year will see an increase in their income tax by up to $1080 but will not feel it for a further 12 months when they lodge the next tax return.
Likewise, while rightfully acknowledging the challenges brought on by natural disasters and despite a global energy crisis brought on by war the government continues to ignore renewable energy generation projects. Instead, they are investing just under $250 millions to support investment in low emissions technologies including hydrogen.
Third, it is all about the assumptions! Josh Frydenberg is banking on wage growth at a time when we are not seeing much. This government does not have a great record in this area – and in fact, have done a great to undermine growth in real wages.
Fourth, this is a political survival budget: apart from the headline grabbing deduction of fuel excise, as The Guardian Australia revealed only 15 per cent of projects announced in the government’s infrastructure splurge have been endorsed as priorities by Infrastructure Australia. Unsurprisingly, most of the funding is being directed towards must-win marginal seats.
Let’s be clear: that is only 21 of the 144 projects being funded by the government are being endorsed by Infrastructure Australia – that is, just $5.7bn of the approximate $16bn in new funding.
The fifth and final point is that for this budget to succeed in its goal of bringing the Coalition home in the next election, it is Josh Frydenberg who must drive the message. The Prime Minister has shown himself unable to deliver messages with sensitivity and empathy – something required at a time that cost of living is really hurting millions of Australians.
Just how poor the Prime Minister’s performance is, was underscored when challenged about the lack of relief for renters. His answer was to encourage people to ‘buy a house’.
Given that in the current property market even a prime ministerial salary would not buy you a property in Sydney or Melbourne, it just shows that Mr Morrison continues to misunderstand the challenges faced by most Australians.
Professor James Arvanitakis is an Adjunct Professor at the Institute for Culture and Society at Western Sydney University, and a Fulbright Scholar