This is a dour, politically cautious budget. Like his previous efforts since Labor’s return to government, Treasurer Wayne Swan has proved reluctant to make hard decision on cuts in sensitive spending areas. Clearly a party badly trailing in the polls and facing a crisis of confidence in its overall direction has shied away from adding to its woes with a serious attack on areas such as middle-class welfare.

The Australian government continues to spend too much money. Our deficits may be almost over, and a fraction of those of other developed economies, but there remains considerable poor-quality spending embedded in a fiscal framework that is already feeling the effects of an ageing population. Future treasurers, Labor and Liberal, may look back upon the efforts of Peter Costello before the GFC and Swan afterward and rue the missed opportunity to place Australia in a better fiscal position to deal with the long-term challenges of a graying population.

Nonetheless, Labor has proved disciplined at containing the growth in new spending, and its 2% spending curb remains intact, a welcome addition to our fiscal policy framework. Its focus on maximising workforce participation is correct, although its capacity to succeed where previous governments have failed must be in question. A major expansion of mental health funding is also welcome, correcting a long-term failure by all governments, Labor and Liberal, state and federal, to adequately resource this critical area.

Seven out of 10, Treasurer. Much more could have been done, but what has been done is sound policy.