I’m dreading Tuesday night’s budget. I’ve seen the rehearsals, the provincial previews, but it’s Broadway’s turn for Josh Frydenberg to strut and fret his half hour upon the stage, full of sound and fury, signifying …Well, we’ll find out soon enough.
Don’t get me wrong – I love actual federal budgets, the challenge of sorting the wheat from the chaff, finding the messages public servants have inserted among the spin, the deluge of data, the supposed blueprint for the economy.
But the speech. Oh dear.
Budget speeches are never flash, but at least they used to contain some news value.
This one, we’ve already heard most of it plenty of times.
There will be stuff about the economy being strong before COVID struck (it wasn’t), about the budget being “balanced” last financial year and on track for a surplus (it’s gone, Josh, let it go) and “unprecedented” and “record” will compete for the most-used adjective of the night.
There will be “core values”, spending will be “targeted, temporary and proportionate”, this government will believe “people should keep more of what they earn” and no doubt, small business will be the lifeblood and/or engine room/core of the economy.
Oh, and most of all, it will be all about jobs, jobs and jobs. After all, the #Scottyfrommarketing team has already trademarked it as the JobsMaker budget.
Beyond the rhetoric, much of the news value that might hold attention has already been squandered in this government’s love of announceables.
So the Treasurer’s half hour will be heavy with re-announceables and re-announcing re-announceables, not to mention embroidables.
Embroidables are core marketing material. For example, most recently, Scott Morrison found a non-existent queue of ships off Port Botany.
For the budget, the government is indeed spending a squillion dollars on emergency safety nets, but it sometimes tries to claim it’s doing a squillion squillion by including the value of the Reserve Bank’s financing contributions – which cost the government nothing and are not budget items.
My suspicion is that the Frydenberg/Morrison spin machine will be relying primarily on the shock and awe of the proposed deficit this year – $230 billion or more – for its main impact.
Most of that spending will be vital, though much of it will be open to questioning about whether we are getting the most bang for our multi-billions.
A large percentage of it could be filed under “Never waste a good crisis”.
For further example: there will be a motza announced for improving aged care, made to sound like the government is responding to a crisis without ever acknowledging the government’s role in creating the crisis, as detailed in Rick Morton’s Saturday Paper reporting.
And then there’s the ability to play to key conservative ideology even while going massively into the debt and deficit that the Coalition had proclaimed as total ruination for the past dozen years.
Watch for the budget papers stressing the role of small business i.e. the Coalition’s political base. The mask slipped a little on Sunday when Treasurer Josh Frydenberg was talking about a $1.2 billion program to pay half of apprentices’ wages.
“This builds on the $2.8 billion we’ve already announced, bringing to $4 billion the total amount that we are providing to create more apprenticeships and our announcement today will help create 100,000 apprenticeships,” Mr Frydenberg said.
“Whether you are a baker or a butcher, whether you are a sparkie, whether you are a plumber or a carpenter, you are getting support from the Morrison government.”
Ah, yes – encouraging apprenticeships is motherhood stuff, but the program also means Scott Morrison’s tradies will be getting extremely cheap apprentice labour while gliding over the government’s cuts to education.
On a much bigger scale, The Guardian’s Greg Jericho has neatly explained how the ideologically-driven flattening of our progressive tax system is about to be brought forward under cover of “stimulus” spending.
Bringing forward income tax cuts for those at the top of the tree delivers very poor “bang for buck” just when we need maximum bang – but it’s likely to be the single biggest item adding to the $184 billion deficit announced back in July.
All manner of well-meaning folk have suggested smarter ideas that won’t be adopted because they don’t fit the government’s dogma.
That’s where an even bigger figure will be hovering just out of sight on Tuesday night – the opportunity cost of better, smarter policies binned in favour of second-rate or even third-rate ways of spending money.
Cue the government’s HomeBuilder subsidy compared with a major investment in extra social housing.
So in the wheat/chaff sorting job, there are a couple of tricks to be mindful of.
An absolute favourite, kicked off by Joe Hockey in his first budget, is to think of an impressively large number and just keep adding up years of spending until you get there.
The prime example of that is the government’s “record” $100 billion transport infrastructure program.
(It’s over 10 years, so it’s actually not much in the general scheme of infrastructure spending at all and, in real terms, about the same annual amount Mr Hockey was talking about back in 2014 when he was trying to disguise a reduction in federal infrastructure spending.)
It’s pretty much standard procedure now. Media universally fell for it last week with the #Scottyfrommarketing announceable of $1.5 billion to “transform” Australian manufacturing.
Um, that’s over four years – $375 million a year isn’t transforming anything, but it will be repeated in the budget.
For really big marketing figures, the pollies go for 10-year fantasies. Note that such a time frame includes at least three elections, when anything becomes possible.
Given how bad Treasury, the Reserve Bank and everyone else is at forecasting one year in advance, the amount of uncertainty about forecasting a decade is incalculable. How are those old forecasts of the costs of the F-35 Joint Strike Fighters and the yet-to-be designed French submarines going?
Each year I feel I have a duty to remind people that Treasury is the first to put its hand up in agreeing that forecasting is a mug’s game, which is why it only attempts to forecast two years – the current financial year and the next one.
The other half of the budget’s much-quoted “forward estimates” are only projections based the assumption that the economy will return to normal over five years.
No, I’m serious – that’s what they are. Make that assumption and everything tends to look tickety-boo by the final year of the budget’s four-year horizon.
If you can manage to fiddle a few key inputs into Treasury’s modelling – as was done last year with population forecasts – you can perform quite remarkable feats, particularly for election budgets.
And never mind four-year forecasts, there’s many a slip twixt cup and lip when it comes the government delivering what it announces within one year.
The government’s record of timely spending isn’t good.
Nine News on Sunday night was running the story of Mr Morrison’s $400 million “congestion busting” election promise last year that has seen only $148 million spent.
The Federal Government has spent less than half the money set aside in last year's budget for a congestion blitz.
— 9News Melbourne (@9NewsMelb) October 4, 2020
Infrastructure spending will be a promoted feature on Tuesday night. So far, though, there’s been no increase in that old “$100 billion over 10 years” pledge.
For the multibillion-dollar infrastructure talk that we’ve already heard and will hear again, the main problem is that the mega-project road and rail and tunnelling operators are already operating at capacity.
When Australia needs extra jobs created quickly, big infrastructure is not in position to deliver.
The idea that the government might announce time-limited infrastructure grants to the states could be a cunning plan indeed.
I hope I’m wrong about all this. I hope Josh Frydenberg parks his trickle-down ideology at the door and surprises with intelligent and highly efficient job creation schemes that will immediately have real impact on our high unemployment and underemployment rates.
I also hope to win OzLotto one day.