There are some things to admire in the Abbott government’s first budget. The media routinely bags contemporary politicians for lacking the policy bravery of the political giants of the 1980s and ’90s. Well, Joe Hockey has brought back the petrol excise indexation abandoned by John Howard. The government has boldly — although it refuses to admit the obvious — broken an election promise about not raising taxes. It has even taken on its own base, at least a little, in curbing pension indexation. These are measures to be applauded.
Ultimately, however, this budget fails two keys tests. It refuses to really embrace the challenge of long-term fiscal sustainability. The restoration of fuel excise indexation is welcome, but at the same time as that measure is garnering hundreds of millions of dollars in years to come, superannuation tax concessions will be expanding by billions of dollars a year. The cost of encouraging superannuation saving will hit $50 billion in 2017-18. It is a figure that will by that point be far in excess of the cost of pension and Defence spending, and be beginning to rival health spending. It should give any government pause for thought. But not this one.