Because we’ve been too busy talking about health reform and tobacco excise and now super profit taxes and generally how godawful things have gone for Labor lately, the traditional Budget leak season has been very curtailed. Who knows if we’ll even get the traditional leaks for the pre-Budget Sunday papers.
It might also be because the Budget will, as both Wayne Swan and Kevin Rudd have emphasised, be a dour affair, in which the phrase “no frills” will take its place in the pantheon of Rudd Government cliches.
The guts of it will be health spending, and getting the deficit down. That’ll be it, pretty much, apart from a few baubles. Don’t forget the Government has more income tax cuts rolling in on July 1. Expect those to feature in the selling of the Budget.
The MYEFO forecast back in November was for a $46b deficit in 2010-11, with a return to surplus in 2015-16. Polling from Essential Media suggests voters are strongly focused on deficits in this Budget. The Government will need a deficit figure with at least a 3 in front of it, and desirably a 2, and a much more rapid path back to surplus.
Government sources say this time around the search for savings has been exacting and comprehensive, although that’s no different to what we’ve heard over the last two years. Yesterday’s flat retail sales figures won’t change that. The Government has been aware for some time that retail sales are weak — partly due to the withdrawal of the stimulus, partly due to the RBA’s returning of interest rates to normal. The tax cuts will partly address that, as will the impact on national income of the resources boom. The Government will be much more relaxed about soft demand at this point than 12 months ago.
The positive aspect of the relative quiet surrounding this year’s Budget is that we’ll be spared the usual overselling by the Government. That’s especially compared to two years ago when all of us, including shadow treasurer Malcolm Turnbull, were led to believe there’d be swingeing cuts and blood on the fiscal floor, only for the Budget to get a short back and sides and a couple of shaving nicks.
Whether the deliberate downplaying of expectations by Rudd and Swan means they’ve belatedly realised the perils of overselling themselves, or they’ve just been too busy to talk up the epochal nature of Tuesday night’s proceedings, won’t be clear until then.