“All you
need to know about Australia’s new budget is that the Labour (sic) Party
thought it was pretty good,” The Asian Wall Street Journalreported last week:

Canberra on Wednesday skirted politically
unpopular, long-term structural reforms necessary to bolster future economic
growth in favour of short-term giveaways. If Treasurer Peter Costello can’t push
through real tax reform in good times, we wonder, when can he?

To Mr. Costello’s credit, his 11th budget – a
record – sure was comprehensive. It touched income tax rates, health care,
defence, infrastructure spending and pension savings, to name a few. Mr.
Costello made changes in all of these areas. The trouble is, he did so too
timidly.

Alex
Millmow
from the Economics faculty at the University of Ballarat was bearish in The Canberra Times last week:

While we know that the fiscal largesse is the
product of the great mineral resources boom, the thought in the back of our
heads is how long can it continue? How long can we ride our luck and, for that
matter, should expenditures be based upon high export prices…

Today, the Australian terms-of-trade is hitting
the ceiling. Peter Costello reckons there is another two years of windfall
remaining…

Not so Paul
Kelly

in the Weekend Oz:

It is the discontinuity between the prosperity
and the challenge, a conflict between the political caution bred by prosperity
and the ambitious change agenda demanded by Australia’s success and new opportunities. It
is time for vision with a capital V, a point obvious from the budget papers.

The Howard-Costello budget mirrors Australia’s transformed economy and the
profound structural changes in the global economy in favour of China and India. These changes are likely to run
for several decades, as the Treasury explains in its statement No.4, Australia in the World Economy…

His
colleague George Megalogenis asked:

Imagine what Peter Costello could have done
before the 2004 election if the Treasury had picked the China syndrome, the
free money that has poured into budget coffers thanks to the resources boom… [A]
more accurate set of revenue forecasts just two years ago would have delivered
a fairer personal tax system, with most workers paying substantially less than
they are today, and a top tax rate with a three in front of it.

Funnily
enough, that’s what Mark Latham’s lost tax package from two years ago – the one
that never even made it to Caucus – pushed for.

All of this
once again raises questions of Peter Costello’s suitability for the top job.

No one
doubts his capacity – but does he have the hunger for it, the real hunger Paul
Keating had, the hunger to seize ideas, shape agenda, turn events to suit his
cause and keep pushing forward and onwards? Treasury has let him down with
its estimate, but even his natural allies at the Asian Wall Street Journal
call him “timid”.

“Costello
has missed the opportunity of a generation to redefine the nation in his own
image,” Megalogenis declared.

And with that, he may have missed another opportunity – the opportunity
to become prime minister.

Peter Fray

A lot can happen in 3 months.

3 months is a long time in 2020. Join us to make sense of it all.

Get you first 12 weeks of Crikey for just $12. Cancel anytime.

Peter Fray
Editor-in-chief of Crikey

12 weeks for $12