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With this budget, Labor is making a grab to take the Holy Grail of Australian politics away from the Liberal Party.
The Liberals’ most sacred treasure is its brand advantage as the party that better manages the nation’s finances. But today it is the Labor government of Anthony Albanese that is about to deliver a budget surplus.
Prime Minister Anthony Albanese.Credit: Jenny Magee
The Liberals had nine years in office and didn’t do it once. Labor will be able to claim a surplus in its second budget, achieved in a little over a year. It’s projected to be a surplus of $4.2 billion for the year ending on June 30.
“The Holy Grail for Labor,” says the pollster for The Sydney Morning Herald and The Age, Jim Reed of Resolve Strategic, “is to recover the economic credibility they held in the Hawke-Keating years. A surplus budget with clear aims and priorities can be the first marker.”
Was this a priority in the minds of the government as it framed the budget? You bet. I put it to Treasurer Jim Chalmers and Finance Minister Katy Gallagher in the budget lockup that they were trying to seize the Holy Grail, perceived better managers of the finances.
Two replied as one: “We are.” Added Chalmers, with feeling: “We really bloody are. This is life’s mission stuff.”
The Coalition’s Treasury spokesperson, Angus Taylor, has said that a “drover’s dog” could deliver a surplus this year. Retorts Chalmers: “So anyone can deliver a surplus except the Liberal and National parties.”
‘So anyone can deliver a surplus except the Liberal and National parties.’
While Labor is longing to recover the Holy Grail, it hasn’t neglected its own long-held holy relics. It’s given them a bit of polish in this budget.
It’s long been perceived as the better party on health, and now it’s spending more on Medicare. It’s long been regarded as the better party on social support, and it’s increasing welfare payments.
The Labor government has increased Medicare funding in this year’s budget.Credit: iStock
Not drastically. Albanese’s attitude to change is to pursue renovation, not revolution. He is setting out methodically to cement Labor as the dominant force at the centre of the political system, incrementally building credibility on the left and right simultaneously.
St Paul’s letter to the Corinthians comes to mind: “I am made all things to all men that I might by all means save some.” The Albanese update would be to add all women.
Was there some luck involved in delivering this year’s surplus? Of course. Strong employment has generated bonus income tax revenues and unexpectedly low dole payments. High prices for commodity exports added to the tax take too.
Finance Minister Katy Gallagher and Treasurer Jim Chalmers on Tuesday.Credit: Alex Ellinghausen
But the Coalition also had lucky years with record commodity prices. They failed to turn the luck into surpluses. Josh Frydenberg came close to budget balance in his first budget, with a deficit of just $690 million. He’s told colleagues that he regrets missing the chance to deliver a surplus when it was in reach. That’s a regret Chalmers will never know.
And the Albanese government has made some serious efforts at restraint. Instead of splurging their windfall tax revenues on new spending, it saved 82 per cent for the budget bottom line. The Coalition saved only 40 per cent of windfall revenues and spent the rest, according to the government.
On the other side of the ledger, Labor has raised some taxes in ways that Chalmers describes as “modest but meaningful”. The government is trimming tax concessions on superannuation balances over $3 million, raising more revenue from offshore oil and gas platforms, increasing tobacco taxes, for instance.
Is the Labor surplus just a one-year wonder? On the budget’s figuring, yes. It projects that this year’s surplus will turn into next year’s $13.9 billion deficit, with more deficits to follow.
So critics validly can dismiss this surplus as lucky and temporary. But, pending confirmation at the end of June, it’s looking like a surplus nonetheless. Liberal scorn will sound like a case of sour grapes.
Labor also will have options next year for producing another surplus should it wish to do so.
The Liberals know they are struggling to hold the Holy Grail. Their fortunes have been written in the polls. They spent so much, and were seen to waste and pork-barrel so much, that their edge had dwindled to a modest 14 percentage point advantage over Labor financial management by the time of last year’s election.
By last month, Labor had neutralised this in the Resolve polling, pulling ahead of the Coalition by a single percentage point. Now, by budgeting for the first surplus in 15 years, Labor hopes to consolidate its claim to the title.
It won’t be able to claim victory for a while. As Reed points out: “Enduring trust is only rebuilt if competence can be demonstrated year after year.” A single major blunder can make the difference between serious drama and farce, between the Holy Grail and a Monty Python romp.
Cut through the noise of federal politics with news, views and expert analysis from Jacqueline Maley. Subscribers can sign up to our weekly Inside Politics newsletter here.
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