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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

Budget night might be fun for political junkies, but for most Australians it’s the one night of the year when a boring political speech intrudes on their evening television viewing. We’re guessing you have seen a lot commentary about the budget both before and after the night in the media, so we’re not going to dwell on this too much.

A general rule in politics is that you can never repeat your political message too many times, because it’s only when you’re sick of your own voice that voters begin to hear your message. That’s why the Treasurer Scott Morrison told us 24 times during his budget address Tuesday night that the Turnbull government “has a plan”. There’s a plan for a “stronger economy” (which receives nine mentions) and a personal income tax plan (politely dubbed tax “relief”). There’s also a couple of other plans, but the Treasurer and Prime Minister won’t care if you only remember the first two. Oh, and also that Australia “must stick to the plan” which Mr. Morrison stressed three times during his speech - which roughly translates into “please don’t throw us out at the next election before we can deliver these goodies for you”.

In keeping with previous years, this year’s budget delivered very few surprises (most were leaked beforehand). The big question remains, has the Treasurer done enough to convince the public that the Coalition should be returned to government at the next election? It is a fine balancing act as it endeavours to appease the electorate - which hasn’t seen a real wage increase for several years despite rising household costs - while, at the same time, needing to maintain its position of being fiscally responsible and getting the economy back into surplus.

The budget was clearly an “election budget”, a summary of the main points being:

  • Income tax cuts – tax relief to reward working Australians, delivered in three stages over the next seven years.
  • Business – extending the date for the small business instant asset write-off; an overhaul of the R&D tax incentives; a crackdown on multi-national corporations including businesses in the digital economy; and further work on the black economy.
  • Superannuation – new rules for superannuation funds to limit fees; and the provision of services that are not required.
  • Aged care and older Australians – opening up of the pension loan scheme to all older Australians; an ability for pensioners to earn more without reducing their pension payments; an increased number of home care packages and a range of policies to help older Australians live longer and healthier.
  • Infrastructure – massive spending on infrastructure and in particular Australian Public Infrastructure.

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