If the government can’t win an election with this cash splash, it should give up politics. This is the biggest budget splurge outside an economic crisis in history, with two $100 billion deficits in a row coming up despite unemployment expected to fall below 5%.
The deficit will still be over $50 billion in 2024-25, making this the first budget in history designed to buy two elections in a row. Josh Frydenberg has more than lived up to his commitment to abandon the return to fiscal discipline and keep spending money to push unemployment down as far as possible.
If we want to suspend political disbelief for a moment, you can see a policy justification for Josh Frydenberg’s determination to keep firing the cash cannons long after we’ve returned to our pre-pandemic levels of joblessness. The government’s forecasts for the Wage Price Index will barely shift even as unemployment reaches 4.5%: 1.5% growth next year, 2.25% in 2022-23, 2.5% in 2023-24, and 2.75% the following year.