For a government that had an extra six months and practically unlimited funding to shape whatever budget it liked, last week’s effort looks increasingly disappointing, both politically and economically.
Remarkably, after a budget that lavished half a trillion dollars of deficit spending on the economy and handed out billions in tax cuts, the government ended the week on the defensive over its indifference to women.
Anthony Albanese, for most of this year hors de combat courtesy of the political demands of the pandemic, adeptly exploited that to unveil a major new childcare initiative that will effectively move childcare into the government-funded service column currently occupied by Medicare, NDIS and, partially, aged care and super.
It stood out not for the cost — at $6 billion, small beer in the post-COVID world of trillions — but because it suggested some vision of what the future economy should look like and why it should be different to the current one. Vision that was wholly lacking the previous Tuesday.
Other critiques have come from the right, rather than the left, complaining that the government had “wasted the crisis” and failed to push through whatever neoliberal fantasy the author most strongly advocates. But the essence of the criticism is the same: no vision.
Since then, some of the wheels have started falling off the budget business centrepieces, the colossal instant asset write-off designed to encourage, or at least bring forward, business investment, and wage subsidies to encourage business to add on workers.
The efficacy of the measures, which are fundamental to the government’s forecast of a business-led recovery, are being seriously challenged. Small business peak body head Peter Strong has raised doubts about the extent to which the wage subsidies will deliver more jobs. Michael Pascoe has pointed out a significant flaw in the investment strategy — the high hurdle rates for business investment, elevated by pandemic-related uncertainty.
And — in what would be declared a “debacle” and a “bungle” if it had occurred following a Labor budget — Josh Frydenberg has had to rush to consult with the Business Council (BCA) because the asset depreciation provision threshold as drafted is too low for the large businesses and multinationals that make up the BCA’s membership. If only other community groups could have Treasury on tap to redraft budget measures for them.
This is in a budget that the government had an extra six months to craft, giving it ample time to consult with business about what would deliver the most effective incentive to get much-needed investment flowing. When your budget strategy is a business-led recovery, there’s no excuse for not getting the business incentives right. If you’re not doing the vision thing, you should at least nail the practical stuff.
The dearth of vision was at least partly ideological. The government seems genuinely averse to supporting social housing, the universal choice for fiscal stimulus. It is deeply reluctant to commit to a permanent JobSeeker increase. The lack of women in its senior domestic political ranks may also explain the strange gap in its thinking on notionally “female” issues like childcare.
But is the lack of substance in the budget beyond tax cuts and business incentives also because this is, even by modern standards, a government of limited substance? Remember the government spent 2019 — as the economy lapsed into deep stagnation and business and the Reserve Bank pleaded for fiscal support — thrashing around for an agenda, having been surprised to discover it was still in office.
The prime minister himself is a man of modest accomplishment prior to politics. Josh Frydenberg’s background is primarily as a political staffer. A look across the ministry reveals few people anyone would accuse of visionary thinking; many Nationals ministers, including Deputy Prime Minister Michael McCormack, show little evidence of any thinking at all.
The only heavyweight in the government is Mathias Cormann, whose departure will leave a massive hole in terms of experience, political savvy and discipline. His replacement, Simon Birmingham, is a smart moderate who will have giant shoes to fill in both the Finance and Senate leadership portfolio.
That Morrison felt obliged to elevate Michaelia Cash to the deputy Senate leadership is another example of how thin the talent is in Liberal ranks. Nearly as thin as the substance of the budget.
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