Federal Budget Federal budget 2018: Manage your expectations

Federal budget 2018: Manage your expectations

What should we expect, or not expect ahead of the looming Federal Budget 2018. Photo: Getty
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Expectations-management is the name of the game as we head into the final days before federal budget 2018 is handed down.

The government and opposition, along with other political parties, think tanks and lobby groups have spent the past week trying to influence how the media – and through it Australian voters – perceive the year’s most important financial statement.

The government wants us to see the budget as economically responsible and fair, despite the guilty pleasure most of us will experience at the prospect of receiving personal tax cuts over the next 10 years.

This is because superiority in economic management is the strongest card the Turnbull government has to play against Labor at the coming federal election, even if that advantage is based more on voter instinct than fact.

That’s why the Treasurer was unhappy when the acting PM, new Nationals leader Michael McCormack, touted the coming budget as an early Christmas for voters.

Mr Morrison doesn’t want Australians to think he’s irresponsibly throwing cash around, nor does he want us to be disappointed if not enough cash is flung in our direction.

Getting the balance right is a considerable challenge for any government, because we tend to think that governments spending money on our priorities is ‘responsible’, while expenditure on others’ priorities is not.

And this year the challenge is as tough as ever, with an opinion poll published by  Fairfax Media on Friday suggesting voters place a higher priority on a long list of spending measures than they do on reducing government debt or delivering tax cuts.

Hospitals and Medicare were nominated as top priorities by 58 per cent, followed by economic growth and employment (47 per cent), and education and schools (44 per cent).

Infrastructure investment came next at 38 per cent, level with superannuation, pensions and retirement income, closely followed by housing affordability relief (36 per cent). Interestingly only 32 per cent nominated welfare and social services.

A paltry 32 per cent nominated reducing government debt as a priority, however, even fewer considered personal (27 per cent) or business (10 per cent) tax cuts to be a high priority.

The government is counting on the vast majority of voters remaining unfazed by the high level of government debt.

Perhaps the notion of ‘good debt’ and the prospect of an early return to surplus has allayed voters’ fears about the ‘debt and deficit disaster’.

Or maybe we just have the memory spans of goldfish.

Tony Abbott and his enablers are doing their best to jog those memories, in the hope of influencing voters’ expectations of the budget.

From their perspective, only a budget that cuts a swathe through recurrent spending – as the 2014 budget tried to do – tackles debt and makes a sharp differentiation from Labor will be sufficiently ‘responsible’.

The bar has intentionally been set high to create the perception that the PM and his Treasurer have failed (again) with their third budget.

The opposition too is talking about tackling government debt. In his pre-budget speech this week, Labor leader Bill Shorten also attempted to shape voter expectations in a way that sets up the PM to fail.

Claiming that Labor had the “most comprehensive tax reform agenda of any opposition in generations”, Mr Shorten said next week’s budget will probably be well received – at least initially, until the worst bits are exposed – but that the tax centrepiece would reinforce voters’ views that “the game is rigged in favour of a few loud and powerful interests”.

There’s a lot of big spending in Labor’s collection of policies, but there’s also a lot of cuts – more than enough cuts for the opposition to out-bid the government on just about anything it chooses (other than company tax cuts, obviously).

However, Mr Shorten’s speech suggests that Labor will try to do something in its budget reply next week that is even more daring than its audacious policies.

It will try to echo Kevin Rudd’s call for the Howard government’s “reckless spending” to stop by emphasising that the Coalition is unable to control its debt because of the unfair tax system.

And “when a budget loses money through tax loopholes, it is working people who pay the price”, Mr Shorten warned.

In contrast, the opposition promises to reduce government debt by repairing the tax system so that it is fair and “has one clear set of rules for everybody”.

In so doing, Labor will try to wrest the ‘superior economic manager’ mantle from the Coalition.

If it is successful in creating this new voter expectation, the federal election could be won for Labor before the campaign even begins.

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