Photo by Daniel Morton on Unsplash

I cannot remember a time when a government had such a virtually unconstrained capacity to spend to get re-elected – no big cuts, nor tax increases, something for most.

Sure, there are substantial policy issues that had to be dealt with, such as aged care – especially following the national embarrassment and concern generated by the aged care Royal Commission that Scott Morrison himself had initiated.

So too, the need to address mental illness, the NDIS and domestic violence, among others.

There were also political issues that needed to be “neutralised”, where the government had been challenged – such as so-called women’s issues – as well as to make life difficult for the Albanese opposition.

It was also necessary to keep the run of good economic numbers running at least through the election.

The actual timing depends on just how long they can hold it all together; my guess is September-November this year.

Hence, we have the new three-word slogan “Secure the recovery” – that is, do what we have to address these issues to capitalise on incumbency, and on Morrison’s personal positive poll standing.

Unfortunately, not to solve them, nor put in place substantial, longer-term strategies and policies.

It is therefore not hard to imagine staffers working down a list of must-dos, ticking each off with an initiative – not about ideology, just political expediency.

True to Morrison’s marketing bent, each tick is a “headline announcement” with little detail.

Most will begin beyond the next election, for a joint house/senate election must be held before May 21.

Against this modus operandi, it is not surprising that the aged care response – while sizeable in dollars ($17.7 billion over five years) – falls well short of the Royal Commission’s recommendations that would have required at least $10 billion a year, with sizeable wage increases for nurses and workers, as well as training, improved equipment and essential structural and regulatory changes.

I doubt this response will achieve the stated aim of “restoring trust in the system and allow Australians to age with dignity and respect”.

The dominant response in the so-called women’s initiatives was childcare.

Again, big dollars were only concentrated on about 25 per cent of families, and offered no reform – thereby compounding the disincentives and structural failures of the present system.

It is a lost opportunity to have not moved to universal childcare, of which we had some experience early on in response to the pandemic.

It could have been linked with early childhood education (for children up to, say, the age of five), as an effective base for reform of the whole education system.

Of course, our recent growth and employment numbers have looked good, as they should with some 15 per cent of GDP injected in support, and coming off such a low base with pent up demand.

The budget hopes, and that’s all it is, that the private sector will pick up the slack as it phases down its support, but still pumping cash into housing, investment incentives, tax cuts for low-middle earners, loss carry forward provisions, various skills training programs and so on.

The forecasts are rosy – though it’s hard to accept the strength predicted in consumption with real wages negative or flat; the investment boom; and the failure to recognise the significance of the collapse in foreign student numbers, immigrants and itinerant workers; the king-hit to universities and international tourism; and global economic and geopolitical uncertainty.

The whole outlook could be undone with a rapid pick up in inflation, here or globally. There is also the burning question as to how they will transition to budget repair.

Importantly, the economic outlook depends crucially on the courageous assumptions (which the government has subsequently sought to play down) that the virus behaves, vaccination is completed this year and our international border can be opened by mid-next year.

A major surprise, and disappointment, was the failure of the government to recognise its constitutional responsibility and commit to build fit-for-purpose quarantine facilities, to bring Australians home and lay out a pathway to open our border.

The greatest failing of an election budget is that its “vision” is just to the election.

COVID offers a unique opportunity to reset a national longer-term vision, especially as we have seen such a positive response with quick and significant changes in behavior by households, business, government and institutions – in the way we work, travel, interact, shop, save, entertain and so on.

This budget is an important lost opportunity to, say, embrace a national productivity and reform strategy, or to accelerate the essential transition to a low carbon Australia over the next two to three decades.


First published at the Canberra Times on Thursday 13 May 2021.



On this special post-budget episode of Democracy Sausage, Mark Kenny speaks to former Federal Opposition Leader John Hewson and tax expert Miranda Stewart.


Other Budget Forum 2021 articles

Structural Changes, but No Sustainability Reset, by Miranda Stewart.

The Volunteer Workforce Is Key to Achieving Budget Priorities, by Sue Regan.

Looming Tax Cuts Prevent Genuine Expenditure Reform, by Maria Racionero.

Australia’s Planned Patent Box: A Means of Stimulating Innovation? By Sonali Walpola and Tracy Wang.

Could It Pack a Punch? Maybe, but There’s a Lot at Stake: The Reactivation of the Corporate Collective Investment Vehicle, by Alex Evans.

Don’t Shoot in the Dark: Business Support in the Australian Budget, by Andrés Bellofatto, Begoña Dominguez and Jorge Miranda-Pinto.

Fiscal Policy in the COVID-19 Era, by Chris Murphy.

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