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30.03.22

Will Frydenberg’s cash splash change the polls?

A federal budget last night but, you have to wonder, how many people actually know?

The ABC coverage was only the 12th most viewed program in Australia with 420,000 viewers.

So, in a population of 25 million, that is not even two percent of Australians.

Josh Frydenberg did his very best in impossible circumstances.

What was the Treasurer to do?

He had only one choice and that was to see what impact he could make on the poll figures to turn around the Government’s fortunes.

While that is true, the Treasurer is not without significant achievements.

The unemployment rate is expected to fall to the lowest level in five decades; yet, one simple economic truth is that scarcity impacts price.

With unemployment so low, that should mean a lift in wages.

It hasn’t and that will prove to be an Achilles heel for the Government.

He would not have enjoyed some of the headlines that greeted him today, “Frydenberg delivers the biggest load of debt in modern history.”

During the Global Financial Crisis, under Labor, debt levels reached almost 26 per cent of GDP.

The Coalition didn’t miss in targeting Labor as spend-thrifts; yet the budget last night indicated that net debt is expected to peak, in the 2025/26 Financial Year, at an eye-watering 33.1 per cent of GDP.

On the plus side, for the Government, they could argue that the cost of servicing the debt is lower today than it was in the 1980s and 1990s because interest rates have fallen.

But, as we all know, interests rates won’t stay, in the future, where they are today.

The other legitimate concern is that Australia, as a nation, must urgently embrace tax reform.

On a world scale, we are second in the world for relying on taxing individuals for raising revenue.

Remember, there is too much focus on taxing incomes, yet every cigarette is taxed; every beer is taxed; there is GST everywhere and, as we heard last night, the bowser is a veritable tax office.

Just on the bowser, at some undetermined point, the fuel excise will reduce by 22 cents a litre, but only for six months.

Who is going to be in government in six months’ time to raise the fuel tax and therefore the petrol price by 22 cents?

Good luck!

But am I mistaken?

We have had it drummed into us that these dreadful fossil fuels are responsible for every malaise, including the prickles in my feet, yet now we are dropping the price of fossil-fuel-produced petrol by 22 cents a litre, thereby subsidising the carbon dioxide that we have demonised for the last decade.

Work that out!

The other problem that the Government faces in shifting voter opinion is that the $8.6 billion, in one-off handouts, is for “temporary” measures which allegedly address the cost of living.

The trouble is, the voter knows that the cost of living pressures are permanent and especially is this so in relation to housing.

Rents go up, rates go up, electricity goes up.

When incentives are given to first home buyers, that only increases the pressure on the housing market and forces up the price of housing for people who can’t afford a deposit.

Something has to be done about housing.

Josh Frydenberg can’t do much.

These are state issues and we have got pig-headed, green-painted bureaucrats and politicians holding up the building of thousands and thousands of housing properties across Australia.

The absence of housing stock forces up prices putting ownership beyond the reach of people in Struggle Street.

The Treasurer has some wriggle room.

The budget numbers for our key export of iron ore are calculated on a price of US $55-a-tonne when current prices are around $150-a-tonne.

So, every week that coal and iron ore prices stay as high as they are, adds another $5 billion to national income with more than $1 billion going to the taxman.

But the real issue is wages.

And while ever the inflation rate exceeds the growth in wages, the worker is going backwards.

This budget forecasts some miracle that inflation will go from 4.25 per cent this year to 2.75 per cent in 2023/24.

This is against all global evidence.

Of course, if Treasury is right and inflation falls to 3 per cent next financial year and the Wage Price Index picks up to 3.25 per cent, the worker can look to an increase in real wages of 0.25 per cent!

How will that sit with the worker checking his wage packet each week while everything around him is increasing in price, especially childcare?

I expect Labor will make a big run tomorrow night on the childcare front and that is bound to resonate with many voters.

But one wonders, if fewer than two percent of Australians were watching the Treasurer deliver his budget, how much of what he said will have any impact on how they vote?

And how many will sit up to watch Albo?