Speaking to the media in today’s 2015 budget lockup, Treasurer Joe Hockey was full of optimism about both the Australian economy and the state of the budget. But the numbers presented in his document reflect a listless economy and a government so paralysed that, in policy terms, Australia might as well be leaderless.
Looking purely at the taxing and spending numbers, this looks like a stereotypical Labor budget, with spending growing strongly and continuing at a level of GDP — 25.9% — that we last saw when the Rudd government was urgently trying to shield the economy from the financial crisis. Taxation, too, is on the rise, soaring to 24% of GDP over the forward estimates.
And yet the budget will, just as Hockey predicted, be “mildly contractionary”, with the government unwilling to accept the Reserve Bank’s now fairly explicit calls for greater fiscal stimulus. The government has avoided any long-term savings that might be seen as some form of new taxation — superannuation tax concessions are now forecast to cost the government $50 billion in 2018-19, but apparently it’s “class warfare” to touch them.
This is a budget betwixt and between, neither stimulatory not fiscally disciplined, a product of a government so focused on its short-term survival that neither the economic imperative of growth nor the “Liberal DNA” of fiscal rigour define it. Perhaps the government will have some economic fortune — for Australia’s sake, let’s hope so. But this is not the document that is going to lead to the kind of good economic news Joe Hockey appears to so fervently believe in.