Tax cuts. Infrastructure spending. A surplus.
Josh Frydenberg’s first Federal Budget was designed to make a lot of friends and insult nobody.
Woven throughout the Treasurer’s speech on Budget night, after each and every significant policy announcement, was the refrain “without increasing taxes”.
It is par for the course for a Liberal government to extol the lightness of its levels of taxation. But to do so as a qualifier for every new financial measure, shows how this year's Budget was designed for the election - which is likely just over a month away.
In remembering the lessons of its cut-happy 2014 Budget, which was widely reviled, the government knows that to win the election in a time of stagnant incomes and rising costs of living, it has to spend money - to materially improve people’s lives.
The problem is that Labor also knows this is the path to electoral success, and will do the same. So the government had to do nearly everything Labor might do but “without increasing taxes” - while simultaneously inferring that Labor will increase them.
For example, Mr Frydenberg announced:
All of these policies are featured, in principle, in Labor’s national platform.
Although they have not earmarked specific amounts, it is unlikely they will choose not to fulfil these commitments if they win the election.
Even tax policy, which is usually the main point of difference between the Liberal and Labor governments, is not that different when it comes to relief.
Labor has pledged to support the Coalition’s expansion of the instant asset write-off tax benefit for small business. It's even declined to rule out support for the Government’s cutting of the second marginal income tax rate from 32.5 per cent to 30 per cent, and the expansion of the low/middle income tax offset.
So, how does the Morrison Government use this Budget to differentiate itself from Labor?
It will have to lean on the small projected $7.1 billion dollar surplus and hope that voters believe it to show them to be better economic managers.
It will also have to convince voters that it's the best choice for alleviating concerns about wage growth, costs of living and rising household debt.
And yes, it must convince voters that it can do this all “without increasing taxes”. - Lachlan Moffet Gray