The Rudd Labor government’s 2009-2010 budget proposes to raise public sector debt to nearly $60 billion in a bid to try to mitigate the consequences of the global financial crisis.

In his speech to the House of Representatives, treasurer Wayne Swan preferred to talk about the more overtly political features of his budget.

These included a promise to increase support for pensioners, announcements of funding increases for the ABC and the universities, and an infrastructure program involving roads and railway lines.

The political nature of the budget was also underscored by what treasurer Swan did not announce. With the exception of some minor tinkering of the private health insurance rebate, the big-ticket items of upper-class welfare – that is, those aspects of public policy where the material wellbeing of the more affluent sections of society are buttressed with the support of tax-payer subsidies – were left untouched in what was supposed to be a ‘horror budget’.

This means that tax-payer subsidisation of child-care, the subsidisation of private school fees, and the tax-payer subsidisation of the private property market (ranging from negative gearing all the way through to first home buyer schemes) continues.

It is quite interesting how, after 11 years of conservative government under John Howard, a hand-out mentality has become so entrenched in Australian society.

The iron grip of this expectation of government assistance as something of a right is observable in the apparent unwillingness of the Rudd government to really do something about winding it back.

This might also be a sign pointing towards the government’s strategic thinking. Cutting such welfare runs the risk of being unpopular with the electorate.

The Rudd government is not due to go to the polls until 2010, but with key legislation about to be defeated in the Senate for the second time, Mr Rudd may well soon have the wherewithal to request a double dissolution election under Section 57 of the Constitution.

If an early election is to be called, expect it to happen in November.

In the meantime, the Liberal-National opposition will seek to criticise the budget on the grounds that its predicted deficit puts Australia at economic risk.

The opposition will use homilies about national debt being the same as individual debt on the bank-card. As populist as this is, the problem with the claim is that it over simplifies the complexities of the nation’s economy.

The truth is that Australia is and always has been a debtor nation, and that the net foreign debt in 2009 is nearly $678.3 billion of which 96 percent is private sector debt.

The treasurer’s proposal to increase public sector debt as a share of the total net debt to 8.2 percent is a significant increase from 5 percent, but nowhere near the OECD average of 43 percent.

Moreover, the increase represents the public sector stepping in to replace the decline in the private sector share of the debt caused by the global financial crisis.

The alternative to increasing the public sector debt would be a significant decline in investment, and a consequential rise in unemployment.

The complexities of the nation’s accounts will be overlooked, however, as the political debate focuses on simpler and more overtly political issues such as pensions and hand-outs.

This will be due partly to the fact that, in all probability, the 2010 budget has been drawn up as part of a re-election strategy rather than as a serious attempt to reform government activity in the light of the crisis.

The real pain will come when the budget that follows the next election is handed down.

And it may well be that the next election occurs much sooner than the 2010 expiry of the current parliament.

Dr Economou is a senior lecturer in Politics at Monash University