Budget 2017 Turnbull Morrison

All budgets, naturally, are politically important. Indeed, there’s a strong case that they really only have political importance; economically and fiscally they’re nearly irrelevant — predicted budget outcomes end up being billions of dollars off the mark, and economic forecasts eventually become amusing exercises in optimism. But for a government rent by internal division, with a one-seat majority and a Prime Minister whose replacement is openly discussed, this budget is politically vital.

What’s been notable in the immediate lead-up to the budget is a marked shift in positioning away from the Abbott era — something that Turnbull is regularly and correctly damned for failing to undertake. True, the government has renewed its assault on young Australians by proposing an increase in student fees and debt, but is trying to sell this as a marked departure from the even more draconian attack on higher education launched by Tony Abbott and the increasingly invisible Christopher Pyne.

And on school funding, the government find itself occupying a very Labor-like position — endorsing the Gonski funding formula, promising additional school funding, and engaging in a heated row with Catholic educators, who are blatantly lying about being disadvantaged as a result of a significant increase in funding.

Meanwhile the government has learnt to stop worrying and love the debt, actively boasting of its willingness to use low interest rates to borrow to fund productive infrastructure — or infrastructure it claims is productive, even if it’s a train line to nowhere (one can only imagine the froth-mouthed fury of the Coalition and the Murdoch press if, say, Wayne Swan had ever dared talk about “good debt”). There’s even talk of the Medicare rebate freeze being ended, or partially ended, to shore up the government’s stocks on health.

Bear in mind all of this has to be paid for, either by borrowing, by cutting elsewhere or by increasing revenue; more optimistic growth forecasts will partly take care of the last. We’ll only learn tonight who the losers are, beyond young people wanting an education and the inevitable dole bludger crackdown (the 50th crackdown in the last 30 years, and the third this year from this government). But the image the government has tried to project in the pre-budget period is of governing from the centre, rather than from the right; the language of restraint and fiscal discipline has given way to that of meeting the needs of families, especially given low wages growth.

To be sure, this isn’t as big a shift at it sounds. Even the Abbott government, while portraying itself as a kind of vengeful demon come to exact a price in blood for every dollar of deficit spending under Labor, in fact dramatically increased spending from the level left by Wayne Swan, and increased taxes as well, while continuing to pump tens of billions of deficit spending into the economy. In that way, Abbott and Joe Hockey got the worst of both worlds — they outspent and outtaxed Labor, while talking as though they were imposing austerity and bringing some grim fiscal justice.

Turnbull and Morrison — who this year appear to be working together more effectively than in the lead-up to the 2016 budget — seem to have figured they may as well pursue the political benefits of being a big spending, big taxing government. And they’re doing it at a time when there’s just a hint of indiscipline and sloppiness from Labor. Discipline and policy courage have been the basis for Labor’s success under Bill Shorten — and the fact that any Labor lapses would quickly be forgotten when the next Liberal stuff-up happened. If Turnbull is lifting his game, Shorten will no longer have that advantage. That leaves tonight’s budget as the most fascinating in years.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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