25 October 2022
A Bread and Butter Budget to Replace the Sugar Hits of the Past
In recent weeks, the Federal Treasurer, Jim Chalmers, has been at pains to warn Australians that the Australian Budget faces significant challenges and not to expect big handouts, despite cost-of-living pressures. Tonight, he has been true to his word.
We’ve all got used to high-spending cash splashes, so it feels somewhat disconcerting to be presented with a Budget that delivers on a selection of promises without the flashing lights and sugar hits.
In fact, disconcerting may be an understatement because we’ve just been told the next two years are going to be very, very tough, especially if you’re a low-income household without any savings.
Nevertheless, if forced to sum up this Budget, I’d still say it is “one for the people”. Overwhelmingly, measures are aimed at individuals and families, rather than hi-viz handouts. Measures such as increased paid parental leave, better funding for domestic and family violence, a focus on disaster resilience, and lower costs for essentials such as childcare and prescriptions. But most of these things will take time to help.
Businesses might initially feel a little neglected by this offering, compared to the rush of sweeteners they’ve been used to, but there are some smart measures that will help them too. Paid parental leave and childcare should increase female workforce participation and the pool of labour so desperately need. There’s also lots of skills initiatives, and even better connectivity for the regions which will be a key part of the journey away from fossil fuels. These are longer term measures of course. A distinct change in diet from previous Budgets.
Perhaps just as importantly, this Budget should instil at least some degree of confidence in businesses because it is not a government wantonly spending and exacerbating inflation and interest rate pressures, which must be key among their concerns as we head into a period of significantly slower growth next year.
Perhaps more important than any individual measures, though, this Budget sets up a conversation the Treasurer is clearly desperate to have with the Australian public – and one that is desperately needed – about the type of public services we want (and even expect) on the one hand, and how we can pay for these on the other. What compromises will we consider?
It may take a little time for Aussies to fully appreciate that the sugar hits of more recent Budgets are a thing of the past, but this Budget sets a clear line in the sand. We can’t have Scandi-style social services based on a Cayman Islands tax system. Something’s gotta give. But there is no doubt the conversation is going to be a tough one – and I doubt we’ll have the problem solved before next May’s Budget.
Aside from setting the economic (down but not yet dire) and fiscal (Computer says No!) scenes for the next few years, this Budget starts two other important conversations previously excluded from Budgets.
The first is well-being. In Statement 4: Measuring What Matters, the Government lays the groundwork to expand on how and what we report on in a Budget, beyond the economy. Potential indicators include work-life balance, civic engagement and natural capital. The return of the Women’s Budget Statement is highly welcomed.
The second is on climate. For the first time ever, there is detailed commentary on the fiscal and economic impacts and risks of climate change. There is also a sperate breakout of all climate measure taken. As the defining issue of this century, this is to be wholeheartedly welcomed.
This is not an easy Budget to sum up and that is a good thing, because it is working towards better economic, social and environmental outcomes over the long term, rather than three-word slogans. No doubt it will have its critics. There are plenty of omissions and still much hard work left to do.
But as a first Budget in difficult times, it passes muster.
© Copyright Nicki Hutley Economics