2018–19 Budget Analysis

State of the Nation

by Professor Anne Tiernan

ust hours after Treasurer Scott Morrison delivered the Turnbull government’s third Budget, detailing personal income tax cuts that would return better than expected revenues to ‘hard-working families’, the High Court of Australia announced its decision that Australian Capital Territory (ACT) Senator Katy Gallagher was ineligible to sit in the Parliament under Section 44. The ruling precipitated the resignations of four Members of Parliament — three Labor, one Centre Alliance — and with it the spectre of what the media quickly dubbed a ’Super Saturday’ of by-elections — five in total, due to the recent resignation of Labor Member for Perth, Tim Hammond.

With Bill Shorten’s Budget-in-Reply speech due the following day, the Government pounced. Cabinet ministers derided the Opposition Leader’s dogged defence of his members’ eligibility and the ‘rigour’ of Labor’s pre-selection processes. It was a setback to the Shadow Ministry’s plans to set the policy agenda for the next Federal election. Shorten’s front bench has been building the policy case for Labor’s approach to economic management and to governing. Despite the orchestrated cheers of supporters in the House of Representatives Visitors’ Gallery, the political backdrop to Shorten’s speech was not what his Party hoped.

If last week’s Federal Budget proves anything, it’s that the madness that has engulfed Australian politics since Kevin Rudd was dumped as Prime Minister in June 2010, persists. The major parties (and increasingly The Greens) seem unable to break the shackles of binary thinking and short-termism that are limiting the nation’s ability to respond to complex problems. The lack of commitment to reform is something that business and civil society groups alike have long lamented.

Neither side is reading the public mood

Despite acquiring revenue rewards and an improved employment outlook as a result of a strengthening global economy, the toxic politics of the first Abbott-Hockey budget that has dogged Malcolm Turnbull since seizing the prime ministership in September 2015. It continues to constrain him; to say nothing of the struggles he has had with his divided party-room. The Coalition’s 2017–18 Budget sought to exorcise the demons of 2013–14 after Turnbull was returned to government at the 2016 poll, but I think its legacy lingers. Some of this is evident in Fairfax/Ipsos polling data indicating that Australians would rather the government pay down debt than provide modest tax cuts.

There is a marked inconsistency between its incendiary rhetoric in Opposition about the need to address the ‘debt and deficit disaster’ and the Government’s decision to abandon the planned increase to the Medicare levy to fund the National Disability Insurance Scheme (NDIS). Labor will try to exploit lingering uncertainty over the strength of the Government’s commitment to public services — notably health and education and to programs like NDIS through the impending by-elections, all the way to the next general election.

Time will tell, but with this inheritance, the Coalition might have made the wrong call in maintaining its relentless focus on binaries. For example, in this year’s Budget, the Coalition has made explicit choices between ‘hard working Australians’ and people on social security; older Australians (baby boomers; the frail aged) and younger Australians; the ‘big end of town’ and ‘ordinary Australians’. This latter seems an especially bold calculation given the revelations of corporate malfeasance and greed emerging from the Royal Commission into Financial Services.

I’m not sure whether constructing a Budget along such imagined fault-lines are necessary or advisable. While it might satisfy the hardheads in the Liberal ‘base’ (and its cheer squad in parts of the media) and the party room, the tendency to contrast different types of Australians and pitting them against each other (‘lifters and leaners’) could backfire with voters in seats where the election will be won and lost.

Benefits of growth unequally distributed

Outside of the Sydney and Melbourne CBD’s — where most of the jobs have been created in the decade since the global financial crisis (and the political class is most densely clustered) — people can see first-hand how unequally the benefits of growth have been distributed. They have family, friends and acquaintances — often young people or retirees, in insecure employment, and for whom the costs of housing, electricity, health insurance and much more are rising beyond their capacity to pay.

Civil society groups have highlighted the Budget’s negative implications for social cohesion. Its lack of action on the cross-sector campaign to lift the rate of Newstart allowance for the unemployed, cuts to Centrelink despite evidence to a Senate Committee that waiting times have increased and millions of calls have gone unanswered in recent months; and promised ‘crackdowns’ on social security recipients will do nothing to assist the vulnerable and socially excluded.

Social cohesion won’t be improved by fewer training and skills places for young people, or by cuts to resettlement services for recently arrived migrants and refugees. Juxtapose this against increased spending in Peter Dutton’s Home Affairs portfolio — one quickly gets a sense that policy incoherence persists despite Turnbull’s promise of a return to ‘traditional Cabinet government’, to ‘respect people’s intelligence’ and to ‘engage in advocacy not slogans’.

Nor does the Budget do anything to address democratic disengagement — the loss of trust in political institutions and processes and indeed, in many other institutions — the banks, churches and the media that is playing out in voter cynicism that is so clear in the Australian Election Study and the Edelman Trust Barometer.

Australia’s public policy tradition is inclusion and equality of opportunity, if not outcome. It’s why there has been such unease when services to vulnerable households are cut. This is where Bill Shorten focused Labor’s response to the Coalition’s fifth budget. Its focus is on ‘inclusive growth’, addressing households and demographics experiencing disadvantage by investing in health, education and skills — Labor’s traditional strengths.

Shadow Finance Minister Jim Chalmers claims Labor plans to win office by ‘walking through the front door’ on policy — that is (and in contrast to the ‘small target’ strategies pursued by parties during recent election campaigns), by clearly outlining its policy priorities and commitments, notably on tax.

Lines are drawn

The Budget and Shorten’s speech-in-reply have drawn the battle lines of the next Federal Election. The commentariat is convinced voters will have a clearer/starker choice when they go to the polls because the two major parties are differentiating themselves more clearly on their philosophy of economic management and their approach to tax. But as ever, the devil is in the detail.

Key demographics — young voters, the unemployed and voters antagonised by the prospect of corporate tax cuts will likely have drawn their own conclusions about the Budget. Others — notably women, might have been influenced by developments in the period since. The pre-selection contest in the Brisbane-based seat of Ryan, which saw the sitting Member, Assistant Minister for Disability Services Jane Prentice replaced by Brisbane City Councillor Julian Simmonds, has only reinforced perceptions the Coalition has a ‘woman problem’ — now compounded by a similar challenge to NSW MP Ann Sudmalis in Gilmore. Turnbull’s unwillingness to challenge Prentice’s dumping — despite the optics and criticisms from LNP members including Warren Entsch and Michelle Landry, serves to remind voters of the Prime Minister’s weakness in Queensland, site of two impending by-elections and some of the Parliament’s most marginal seats.

There’s a long way to run and I have long since abandoned any pretence of confidence in making predictions, but it will be interesting to see how these dynamics play in the by-elections to come. It’s a volatile mix: Queensland, South Australia, Northern Tasmania and Western Australia — but perhaps a revealing one about how the contrasting approaches are being received outside the populous south-east.

ABOUT THE AUTHOR

PROFESSOR ANNE TIERNAN

Anne Tiernan is Dean (Engagement) in Griffith Business School (GBS) at Griffith University.

Professor Tiernan’s research focuses on the work of governing. Her scholarly interests include: Australian politics and governance, policy advice, executive studies, policy capacity, federalism and intergovernmental coordination. She has written extensively on the political-administrative interface, caretaker conventions, governmental transitions and the work of policy advising.

Follow Anne Tiernan on Twitter

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