It’s not quite devil-take-the-hindmost, but this is very much a Liberal budget in its means of delivery.
Tax cuts for high- and middle-income earners, two-and-a-half grand a year. Just $20 a week for the lowest-paid. Some small lump sums for pensioners. Nothing for the unemployed, who revert back to poverty come January on a JobSeeker payment which is significant in its absence in the budget papers or treasurer’s speech.
The best form of welfare is still a job, of course, even when unemployment will still be above 7% in mid-2021.
A huge depreciation allowance, plus retrospective write-off of losses, for business. But little for residential aged care, unless you’re in the burgeoning private Home Care delivery sector, in which case, happy days.
Nothing for the ABC, at a time when Australia’s already shrunken media sector is on its last legs.
This is a budget for winners — for the employed, especially those in high-paying jobs, for businesses with cash to spend on investment and more staff, for the industry sectors the government likes, like resources and defence.
Those winners will — the hope is — embrace their animal spirits, spend their government largesse and get the economy going, and thank the Morrison government at the next election.
But the source of the funding for all this is decidedly un-Liberal. Gone are the days of 23-plus per cent tax-GDP ratio, which has fuelled Coalition spendathons before.
The tax take has plummeted to the kind of levels Wayne Swan had to budget with, while the size of government has gone the other way.
The Morrison government will be, by far, the biggest-spending government in modern Australian history, not just for one or two years, like the Rudd-Gillard governments were, but for year after year all the way into the mid-2020s.
To pay for it, the government will have over $1 trillion in bonds on issue in coming years, and a net debt of $970 billion. Even at trivially-low bond rates, that will mean $13.6 billion in interest payments a year.
In 2010, when net debt was around one-tenth of that size under Labor, Barnaby Joyce warned Australia was in danger of defaulting. One can only imagine he will be apoplectic at the danger of a $1 trillion debt.
In retrospect, it shows what a sham the obsession with debt and deficits always was on the part of the Coalition and its media supporters. Not a word tonight about burdening future generations with debt; no reference to the “fiscal fire brigade”; no glib equation of deficit spending with governmental incompetence.
The Morrison government now offers deficit figures with an extra zero on them compared to the Labor government it derided for fiscal recklessness, and all for a return to an economy marked — if the government’s forecasts are anything to go by — with the same stagnation with which we entered the pandemic: 5% to 6% unemployment, no wages growth, GDP growth well below our longrun average.
But the real benefit for the government is of course political: its massive tax cuts aimed at middle- and high-income earners are primarily a tactic to deliver the next election.
The biggest problems Australia faces — the climate emergency, a crippled aged care sector, an army of chronically unemployed — remain unacknowledged and unaddressed, in favour of individualism funded by the biggest borrowing and spending program in modern history.