Ignore the pre-budget spin and the denials to the contrary. The document unveiled by Wayne Swan tonight is every inch a pre-election budget, just not in the traditional sense of the word.
It has none of the handouts and give-aways traditionally used to entice voters in an election year – there’s no money left to pay for that kind of extravagance anyway, and there are plenty of niggly little cuts to offset the impact of the stimulus splurge.
But this budget provides a clear rhetorical blueprint for the looming election campaign. And it’s framed around a sense of pride, almost cockiness, at the performance of the Australian economy versus the rest of the western world.
Kevin Rudd and Wayne Swan have clearly decided that attack is the best form of defence in terms of their economic performance. The Government has taken a hammering in every major poll, with voters marking the government down for its backflips and broken promises, and the wisdom of its stimulus strategy with increased debt and a ballooning deficit.
The message from this budget is: there is method to our madness, look at the scoreboard, the stimulus strategy has worked. We are outstripping the rest of the world’s advanced economies in terms of economic growth, job creation, and are now on target to return the budget to surplus three years’ ahead of schedule, in 2013.
Reading through Wayne Swan’s speech and examining the Budget Overview, you can almost imagine that, however alarming the polls currently are, the Treasurer and Prime Minister spent their budget preparations high-fiving each other at the Lodge while listening to Queen’s We Are The Champions.
Many voters clearly think otherwise but according to Wayne Swan Australia has just emerged from the best period of economic management in almost 20 years.
“Of Australia’s 18 years of continuous economic expansion, Australians can be proudest of the one just passed,” the Treasurer said in his speech last night.
“Together Australians have defied global economic gravity, not by accident but by choice.”
It was heady rhetoric, backed up with any number of charts showing that while Europe and the Americas have plunged into darkness, Australia has swatted away the GFC away like an irritating fly.
A big part of that success story is obviously the performance of the mining sector. And without the mining sector there would have been no 2010-2011 Federal Budget, as all the major spending measures in tonight’s document are framed around the imposition of the new Resource Super Profits Tax following the Henry Tax Review.
As far as budget strategies go, this is a fairly audacious three-way gamble.
Firstly, it’s a gamble for the Rudd Government to presume that the mining tax will pass the Parliament.
It’s also a gamble to assume that the mining companies, who vary only in the degree of their anger at this new tax, will simply fold their tents and abandon their campaign to force a government re-think.
And the biggest gamble of all is to presume that the voters will support the new tax. This tax has turned into a slow burn for the government. It received limited mainstream attention when it leaked ahead of the Henry Review, and at first blush was regarded by many voters as a fair attempt to redistribute the mining sector’s mega-profits towards tax cuts for small business, reduced company tax, a more generous superannuation scheme and a $5.6 billion investment pool for skills and infrastructure. But now, for every voter who has been swayed by the Government’s quaint nationalistic posturing about mining profits being sent off shore to the big multinationals, others are asking a more sensible question – if it’s the mining industry which has helped keep our economy chugging along, why weaken it with an enormous new tax which threatens jobs, expansion and investment?
If that question takes hold in voters’ minds – and the mining industry has the deepest pockets in the land and will be hammering that message over the coming weeks – it has the potential to undermine the economic arguments which Kevin Rudd and Wayne Swan are putting for winning a second term.
But the triumphalist deliver of tonight’s budget has been a dry-run for the economic message the Rudd Government will carry through until polling day. They have a big sell job ahead of them. And their biggest challenge may yet be that the PM has lost his Kevin 07 mojo and at present could not sell icy-poles in a desert to an increasingly jaded voting public.
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