Saturday, May 15, 2010

Federal Budget & Reply

This week we had Wayne Swan deliver the Federal Budget. By any measure, it was not a traditional “election-year budget”. Make no mistake, though, this budget was driven as much by the politics of re-election as any. 

It had no new tax cuts from 2011; no massive spending programs; no new taxes on “mums & dads” or “ordinary working families” (phrased beloved by politicians). It does offer future increases in superannuation guarantee contributions – something that will please middle and low-income earners. It will begin to wind back the extraordinary government spending used to avoid a recession in Australia; it does aim to return the budget to surplus in 2012-13. The proposed surplus, some increases in health spending and superannuation have been included partly by delaying environmental ETS programs; and by relying on a “super tax” on very large profits from mining and resource companies.

The earlier-than-expected surplus in 2012-13 was designed to silence the Opposition’s claim that only they can manage an economy and have a surplus. The superannuation is something the Coalition will likely oppose in the Party room, but be forced to accept so as not be seen to deny the “mums & dads” or “ordinary working families”.

Tony Abbott’s Budget Reply in Parliament was reasonably well-spoken. He will oppose the tax on extremely high profits by mining & resource companies. But there was definitely a sting in the tail. He was apparently rolled by his own (Liberal) party on payments for stay-at-home mothers; and he promised a return to the core of WorkChoices. Now Tony Abbott has previously said the phrase ‘WorkChoices’ is dead. True, he did not use the term in his reply, but he has promised a return to core elements of WorkChoices: more individual contracts,and removal or dilution of unfair dismissal laws.

Opinion polls indicated that Prime Minister Rudd’s approval had dropped since the budget, and Opposition Leader Abbott’s increased. I suspect that indicates respondents’ focus on image created by,and in, the media, rather than any voter thought about the issues.

Don’t be fooled. Remember, politicians use the media for marketing and image enhancements. Only rarely do they slip-up.