This is a budget built to help Australians hang in there, to endure even though their belts are unbearably tight.
Labor hopes the relief is sufficient for voters to keep faith with them, that people will notice the loosening by just a notch or two rather than their financial pain, which won’t really ease for years yet. It’s about “seeing our people through the hard times” says the treasurer, Jim Chalmers.
And there is real help, spread widely and a little bit thin. There’s a bit under $3 a day extra for jobseekers and a little more for those over 55, extra rent assistance, more money for bulk billing, softened rules for parenting payments, help with energy bills and loans for double glazing and other improvements to keep them down. More than $14.6bn in targeted household relief.
The government says it can spend this much and still reduce inflation slightly next year by bringing down those whopping projected increases in power bills. It has avoided the pointless cycle of government relief being immediately eaten away by prices being pushed even higher. Adding $3 a day to unemployment benefits might help families make a dent in a backlog of bills. It certainly won’t result in a spending spree.
Next year the budget is even forecasting that wage growth will finally outstrip price rises, by just a smidge. But this year wage growth is just 3.75%. Inflation has peaked but it remains at 6%. Households are still going backwards. Population growth is bouncing back after the pandemic, good for economic growth but less so for the immediate and chronic shortages in housing supply. The budget’s handouts will help but, for millions of Australians for the foreseeable future, life will still be a relentless, penny-pinching grind.
The government says it cannot do more, that its hands are tied by the ongoing threat of inflation, the weak global outlook and the need for fiscal prudence – 82% of the short-term commodity price revenue boost has been returned to the budget bottom line to achieve a short-lived surplus this year.
True, to a point, but political considerations have also been a brake on its generosity.
Just before the budget, to take just one example, the government announced a deal to force liquefied natural gas producers to actually pay some petroleum resource rent tax. No resource rent tax-style political backlash ensued, no angry television ad campaigns, no billionaires waving corflutes and shouting from flatbed trucks.
In fact, the gas producers seemed positively pleased. That may be because the budget papers show the $2.4bn raised under the agreement is less than what will come in from the increase in tobacco excise, and also less than will be reaped from a crackdown on goods and services tax compliance. The government avoided a fight but it could surely have raised billions more, which might have been redirected to other needs.
The stage-three tax cuts are also built into these figures, any redesign of their benefits even for the very wealthiest apparently shelved until after the next poll, if ever.
“In all our decisions, we seek to strike a considered, methodical balance,” Chalmers said as he presented his second budget – “between spending restraint to keep the pressure off inflation, while doing what we can to help people struggling to make ends meet.”
“Methodical balance” is exactly how the Albanese administration has been governing to date, taking people with them, not picking too many fights, planning for the long term, thinking forward to the next budget, and the one after that. Structural budget reform will happen, over time, with care.
The question is whether Australians, struggling right now, will thank Chalmers and Anthony Albanese for the budget handouts, and accept the need for fiscal and political caution, or whether they will think a Labor government should have done more. The government might have a considered long-term plan – but are hard-up households prepared to wait?
