Treasurer Josh Frydenberg finds himself walking a tightrope, committing to repairing the economy while maintaining the LNP’s reputation as the party of fiscal responsibility. Any misstep will have disastrous consequences for an election that will likely be coming sooner rather than later, or for the fortunes of a country that is still recovering from a historic shock.
But it seems that Mr Frydenberg will deliver a budget that nobody is happy with: free-market conservatives are disappointed by increased government spending, while Labor and the Left believe that the government has not spent enough, or on the right policies.
Budget announcements have come thick and fast for the last fortnight – even over the weekend, where stories usually go to die. That in part has led Labor to decry the budget as a flashy “showbag” devoid of any real policy. The government would doubtless contest that, believing that the number of announcements speaks to a wide-reaching agenda to make the Australian economy and people whole again.
But there is no through line, no bold reform agenda that will return Australia to prosperity, no uniting vision for what the economy should look like in 10 years or beyond. Instead there is money for everything: women’s health, childcare, aged care, housing for single parents, social housing, a handful of infrastructure projects. These are all worthy causes, and causes that the government has repeatedly and rightly been excoriated for ignoring. But there is no new policy here that will restore dynamism to the Australian economy, or make us less dependent on the small basket of industries (and countries) that have propelled the lucky country’s growth for decades.
The economy was in the doldrums before COVID-19, and while GDP is expected to increase over the next few years, it is unlikely that increase will be sustained. The government’s historic stimulus efforts will inevitably come at a cost, too. Deloitte anticipates that the government will need to save $40 billion a year if it wants to get the budget back on track, and that means unpopular decisions – probably to do with taxes.
That’s something that the LNP would like to avoid at all costs. But if economic repair doesn’t lead to budget repair – if the business-led recovery never eventuates in the absence of government policy to set a path for it – then that will be their only way out. Let’s hope that Mr Frydenberg kept something in the bag for budget night.
