News Paul Bongiorno: PM’s only hope is budget numbers saving him

Paul Bongiorno: PM’s only hope is budget numbers saving him

Any tax cuts or similar incentives by PM Scott Morrison will be limited by the budget figures, Paul Bongiorno writes. Photo: TND
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The word out of the federal government is a desperate Scott Morrison will use improved numbers in the budget to attempt a huge tax cut to buy his way back into government.

John Howard tried and failed with the same tactic in 2007 when Labor’s Kevin Rudd quickly matched him, but at least then the budget was in rude good health thanks to years of the mining boom.

This time a measure of the Prime Minister’s desperation is that he even is considering yet another electoral bribe on top of the hugely generous tax cut for higher-income earners already baked into the next term.

They are the phase-three tax cuts legislated three years ago before the pandemic blew away any chance of him delivering the “back in the black” budget promise at the last election.

Scott Morrison could follow in John Howard’s footsteps by offering tax cuts.

So before new tax cuts are contemplated both sides of politics have already put into law cuts costing $16 billion a year and mainly benefitting those earning $150,000 or more.

Mr Morrison can’t be sure that Anthony Albanese won’t follow the Rudd precedent, especially as the Labor leader waved through the stage-three largesse rather than pick a fight over it.

With budget deficits forecast as far as the eye can see, whoever is in government will be borrowing to fund this already grossly irresponsible generosity.

So even if the Treasurer is able to show the budget is rapidly repairing in his Mid-year Economic and Fiscal Outlook on Thursday, whatever he earmarks for future announcements like tax cuts will go on his credit card.

The $103 billion budget improvement over four years Deloitte Access Economics estimates to be a more rapid recovery than officially forecast, will still leave the budget just over $90 billion in the red this financial year.

No doubt further borrowing will be sold in terms of “trickle down” and economic stimulus, with the promise as the economy grows the debt will be repaid.

But if the form of the past three years is any guide, it will be low-income earners and the vulnerable who will be called on to pay dearly for budget repair.

To get away with this the government will be counting on crucial voters in the outer suburbs having short memories and being more worried about their immediate cost-of-living pressures.

It is a cruel mirage.

Deloitte economist Chris Richardson fears Australia is in catch-up mode. Photo: AAP

Deloitte partner Chris Richardson says while the budget recovery is remarkable, it’s not enough to cover the commitments and expectations the government has made to social and health services.

He says “a range of commissions and reports indicate that Australia government spending is still in catch-up mode for aged care, disability and mental health”.

Mr Richardson adds to that defence spending where literally billions is needed to cover poor procurement decisions by the Liberals on helicopters, submarines and frigates.

Voters will have to weigh up if Mr Morrison is returned – thanks to a fistful of dollars on offer – will he make them pay in other ways as he seeks to assure the market he is fiscally responsible.

The question is does the Prime Minister want to play the “catch up” Chris Richardson has identified as needed?

There is no doubt Mr Morrison will be playing political catch up first and foremost, with the latest batch of opinion polls putting him well behind – the Roy Morgan poll late last week the most dire.

The Morgan Poll has the government trailing in its hitherto stronghold state of Queensland.

Mr Albanese was the first leader to take advantage of the border reopening, heading for Caboolture in the marginal seat of Longman that Labor hopes to win back.

anthony albanese election
Labor leader Anthony Albanese was quick to head to Caboolture after Queensland opened its border.

The Prime Minister is sure not to be far behind.

Before the shock 2019 win the pundits would by now have written off the Coalition’s chances.

What we do know is the electorate is volatile and the outcome will come down to largely disengaged voters in eight or so marginal seats.

Mr Morrison may not be game enough to recall Parliament even for a week next year and risk putting the splits and divisions within the government on show again as we saw at the beginning of December.

That could well mean a March election.

Labor is taking no chances and has its campaign headquarters set up and ready to go in Sydney.

It is determined not to be outflanked on social media this time.

A marginal seat Liberal MP says he’s not sure if Scott Morrison has made up his mind.

Fortunately both leaders are well aware that the last thing Australians want is for the lazy, hazy days of summer to be interrupted by political haranguing.

So we should all try to enjoy the lull before the storm.

Paul Bongiorno AM is a veteran of the Canberra Press Gallery, with 40 years’ experience covering Australian politics