The Budget announced last night has widely been described (both favorably and otherwise) as “clever”. There are tax cuts across the board, with the biggest proportional benefits going to low-income earners. And there are lots of spending initiatives, particularly targeted at areas where the government is vulnerable because of past cuts. There’s a lot of money for universities (which, unsurprisingly, I welcome) partially reversing the cuts of the Vanstone-Kemp era. And the Commonwealth has resumed funding for dental services ten years afer this was abolished. Similarly, there’s a bit more money for alternative energy, an area that’s been cut in the past.
But (again as lots of people have pointed out) there’s no big idea here. Overall the tax cuts continue a pattern of returning real and nominal bracket creep, leaving the share of national income going to the Commonwealth effectively constant. And the new expenditure that’s been announced consists of lots of little things, some better than others, but none likely to make a fundamental difference to the way people perceive the government.
This Budget would make political sense if the government were cruising towards victory, and just needed to shore up its support. But it seems unlikely to do much to claw back the big lead Labor currently enjoys. Maybe the government is confident of winning on the IR front, and doesn’t think it needs any more than this. But that seems unlikely to me.
My guess is that the government is saving up something big for the election campaign. An obvious area would be climate change, where the Budget had only token measures. Alternatively, we might see a relaunch of the water plan. Finally, although the Budget had plenty of money for transport infrastructure, I was surprised that the Melbourne-Brisbane railway proposal, which was the subject of some pretty confident leaks, didn’t get a run. Maybe the government is planning to go the whole hog and announced support for the plan for an inland rail line from Melbourne to Darwin. This proposal has been kicking around for years, and Melbourne-Brisbane can be seen as the first leg.