Finance Finance News Michael Pascoe: Look out, here comes the 2020 budget marketing bulldozer
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Michael Pascoe: Look out, here comes the 2020 budget marketing bulldozer

Michael Pascoe says we should be looking closer at the details of any budget announcements. Photo: TND
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The Prime Minister, Scott Morrison, has already branded the 2020-21 federal accounts as the “JobMaker budget”.

It looks like it will require a subtitle – “never mind the quality, feel the width”.

With 15 sleeps until Josh Frydenberg’s half hour upon the stage, the marketing bulldozer has left the shed with an anonymous “senior member of the government” guiding the Nine Entertainment newspapers to announce “the Morrison government is preparing to unleash an ‘astounding’ amount of spending in next month’s budget to drag the country out of its first recession in 29 years”.

“A deficit well beyond $200 billion is now expected,” the papers reported.

Well, a deficit well beyond $200 billion has been expected – and hoped for – by anyone playing along at home since the moment Mr Frydenberg announced a $184.5 billion deficit two months ago.

That figure assumed an earlier opening up of the economy and internal borders before Victoria moved to Stage 4 lockdown.

And it was before the apparent confirmation that the government will bring forward the flattening of our progressive income tax system, delivering tax cuts that overwhelmingly flow to the top 20 per cent.

Bingo – you hit $200 billion in a canter, as the government likes to say.

Scott Morrison and Josh Frydenberg. Photo: AAP

The papers’ anonymous briefer claimed the size of spending to be revealed on October 6 “would shock many observers”.

Well, we’ll see. Some of us have learned to look through the size of the government’s signature #Scottyfrommarketing spending announcements to find actual spending isn’t nearly as impressive.

Announcements have to be discounted for the government’s now-standard marketing trick of adding up a decade’s worth of spending to arrive at a headline-capturing number.

For example, last week’s “$1.9 billion” energy policy stunt: Most of that big figure is to be spread over 10 years (if it actually happens), meaning the annual commitment isn’t so flash in the context of an annual $500 billion federal budget or $2 trillion economy.

For another example, the government’s “$100 billion infrastructure investment” announced last year also is over 10 years, meaning the real annual spend over the decade is less than Joe Hockey was promising in 2014.

Then Treasurer Joe Hockey agreed Australia's safeguards against the global flow of dirty money should be strengthened.
Then treasurer Joe Hockey promised greater infrastructure spending in 2014. Photo: Getty

In terms of scale, NSW alone is investing 20 per cent more than the Commonwealth on road and rail infrastructure.

More important than size though is the quality of spending.

This is where we must live in hope that Josh Frydenberg will suddenly start singing a very different song on October 6 if the real measure of a recession – high unemployment – is to be brought down quickly.

So far, the bulk of government spending has been in the nature of a most-welcome safety net, lessening the depth of the recession through JobKeeper and the JobSeeker supplement.

With both being tapered, the next phase needs to be job-intensive. This is where the government’s tune has thus far had an ideological rather than practical lilt.

Exhibit A: There is nothing closer to the Liberal Party’s ideological core than promising tax cuts – but analysis after analysis has identified that bringing forward the legislated tax cuts is, at best, second-rate policy right now.

The better-off have the ability and propensity to save extra money in uncertain times when the nation needs consumers to spend.

The $680 million HomeBuilder scheme announced by Michael Sukkar will create only 9600 jobs.

Exhibit B: The government’s “$680 million” HomeBuilder scheme, announced by Housing Minister Michael “Branches” Sukkar as protecting “hundreds of thousands of jobs”, but will create only 9600 jobs according to Treasury and is proving more than a little clunky.

The main winners from HomeBuilder seem to be developers selling land on city fringes. There’s a good deal of pull-forward in the scheme and plenty of money will end up going to projects that would have happened anyway, never mind that the spend is a fraction of the expected drop in housing construction.

Now it’s reported that extending inefficient HomeBuilder will be part of the “astounding” budget spending. Investing in needed extra social housing would be much more efficient from a job creation point of view, but apparently not to the federal government’s liking.

Exhibit C: Last week’s gas/energy stunt that seems more about politics than securing the nation’s energy future, especially Scott Morrison’s effort in feeding the coal industry’s myth of carbon capture and storage.

The “how good is gas” plan was clinically dissected and buried by the ABC’s Laura Tingle – “we are left with a truly excellent government rescue for a crisis that isn’t happening” – but the Coalition seems determined to spend money on it one way or the other.

Exhibit D: The “pulling forward” of $10 billion of the government’s aforementioned $100 billion infrastructure spending.

The big projects politicians love for ribbon-cutting and headline purposes are extremely difficult to actually “pull forward” – they take many years and our big transport infrastructure builders are actually running at about capacity, already ramping up for projects before COVID.

 

To the extent that the announcement is real, it will take more time to have impact. And note that there is still no hint of an actual increase in the government’s $100 billion pledge.

There would be more immediate impact to be had by throwing money at local councils, but so far that has been minor.

Exhibit E: The gap between announcements and reality.

Mr Morrison has talked a big game about improving education while overseeing policies that are costing thousands of jobs at our universities.

There’s the promise of more jobs from unspecified “industrial relations reforms” – but any gains are years away when we already have a  flexible workforce (according to the Productivity Commission) and a dangerously casualised one (according to anyone at the coal face).

That’s five exhibits, enough for a listicle. The safety nets have been helpful and more such help is being promised, but a bigger vision is required from here if we’re to be shocked.

So far, there has been no sign of such vision.

The nearest thing to a “plan” has been last week’s energy stunts.

Like I said, there has been no sign of bigger vision.