Budget eve comes to a close
And so will the blog. A little earlier than usual because we all have a lot of reading to do, highlighters to prepare and thermos’ to find, because DPS is no longer supplying us with urns, forcing us to use the coffee cart.
But you don’t care about that. You care about what’s in the budget and what it means for you.
And we’ll be bringing that to you as soon as possible tomorrow. The blog will be up and running, helmed by me until the lock up, and then you’ll be in the very capable hands of Chris Knaus.
I’ll return, rabid and overdosed on caffeine from the lock up just before Scott Morrison heads to the chamber to say good evening, and will carry you through to the budget reaction. Doesn’t that sound like a fun day!
And the fun doesn’t stop there – Wednesday morning we get the high court ruling and then on Thursday, it’s the budget reply. (Friday, we all collapse in a sobbing, heaving mass, but you don’t need to know about that either.)
So make sure you get some rest tonight. You are going to need it.
A big thank you to the Guardian brains trust for helping me through first day back rustiness and of course to Mike Bowers, who not only runs around this entire building for me, but brings me snacks.
You can find him at @mpbowers and @mikepbowers. You can find me at @amyremeikis and both of us (usually) at @pyjamapolitics.
We’ll be back bright and early tomorrow morning – and we’ll be ready, even if the Budget Tree isn’t. Remember we’re offline while in the lock-up – there is no internet or phones allowed – but I’ll explain the process for those unfamiliar with it all tomorrow morning.
In the meantime, go enjoy your life and take care of you.
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Earlier today, Westpac announced a half-yearly cash profit of $4.25bn, up 6% on this time last year.
It was the last of the big four banks to announce its results, with the Commonwealth Bank releasing its half-yearly cash profit in February ($4.7bn, down 1.9%), followed last week by ANZ ($3.5bn, up 4%), and NAB ($2.8bn, down 16%).
Westpac’s chief executive, Brian Hartzer, has taken the opportunity to acknowledge the damaging revelations emerging in the banking royal commission, saying the bank is working hard to restore customer trust.
“Westpac is already well advanced in taking steps that will improve customer outcomes,” he said in a statement to the stock exchange.
“We have been actively seeking out instances where we’ve got it wrong, and in those cases, putting it right for the customers affected.”
Just a reminder:
In the last fortnight of the royal commission, the senior counsel assisting the royal commission, Rowena Orr, told the commission it was open to find that Westpac may have breached its obligations under the Corporations Act in relation to two of its financial advisers.
The commission heard how one former financial planner, Andrew Smith, who worked for Westpac and St George bank between 2007 and 2015, eventually had to resign after it was discovered he was charging customers for services he never delivered, keeping woeful records, and asking clients to sign blank documents.
His misconduct led to numerous customer complaints being registered – which are expected to cost Westpac $2.2m in compensation payments to 91 clients.
Michael Wright, the head of Westpac’s BT financial advice subsidiary, admitted to the royal commission that it took months for Westpac to report Smith’s conduct to the Australian Securities and Investments Commission (Asic) as a “significant breach”.
The commission also heard how a senior financial planner working for Westpac gave poor advice to a couple that cost them their dream retirement.
Speaking of Tim Storer, he is on Sky News talking to David Speers about the company tax cuts – and says he is still to be convinced by the government’s argument.
He still wants a complete tax overhaul.
With the way the Senate is set out, the government needs both him and Derryn Hinch (as well as One Nation, Cory Bernardi and David Leyonhjelm) to get the legislation across the line.
Storer says he’ll take a look at the budget and then think some more on company tax cuts – but he is not really moving from where he was last month.
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Tony Abbott was on 2GB a little earlier, longing for 2014. Or at least the saving measures he oversaw:
“Since then there hasn’t been an enormous appetite for reigning in spending and that’s the big challenge that we face,” he told Ray Hadley. “It was good that the treasurer said we’re going to try and limit tax to 23.9% of GDP.
“The problem is that if you look forward, it seems spending is stuck at 25% plus of GDP.”
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Speaking of tax cuts, Pauline Hanson was on Sunrise this morning, where she was saying she was not in favour of them:
“We can’t afford it. We really can’t. They borrowed more money last week ... we are up around $550bn that we are owing. We can’t. The interest we pay on this – they say they will bring it to surplus. People must be very clear about this. This is only bringing up back to surplus but not paying back the debt.”
This is, of course, the same Hanson who changed her mind and decided to support the government’s $68bn company tax cuts (in exchange for money for apprenticeship programs) last month.
Ultimately, it was Tim Storer saying no which killed that bill off.
For now.
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So, the tax cuts for low to middle-income earners are meant to amount to at least $5 a week, with more to come over the next decade.
This is expected to be the last budget before the next election (the only way that changes is if they hold the election at the last possible moment next year, and bring the budget forward) so it is not a surprise to see so much spent on infrastructure and tax cuts.
But if there is some jewel in the budget crown other than tax cuts, the speculation has been muted. Which makes sense – tax cuts cost a lot of money, which this budget doesn’t seem to have too much of to throw around.
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Here’s a bit more from what Jim Chalmers had to say:
We have a treasurer out there this morning banging on about a tax-to-GDP cap in the budget of 23.9%. How many Australian families do you think are sitting around the kitchen table tonight talking about the tax cap of 23.9%? This just shows how spectacularly out of touch Scott Morrison and Malcolm Turnbull are, if they think that they will get a round of applause from the Australian people for implementing an abstract and arbitrary 23.9% tax to GDP cap in the budget. Australians don’t care whether the tax-to-GDP cap is 23.9%. They care whether the tax system is fair and they care whether it funds the things that we as a society truly value. They care whether tax is fair and whether it can pay for our hospitals and our schools. Whether there are two tax systems in this country or one.
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Things have gone quiet over here. Labor is holding its caucus meeting this afternoon but joint party room won’t be until tomorrow.
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For those looking for a refresher on what we know so far about the budget (outside of what we learnt today), here is something we put together over the weekend.
The betting agencies have opened up their books on the budget, if you are in to that sort of thing.
At the moment, someone falling asleep in the chamber is paying $31. It may be me.
Samantha Maiden has just confirmed on Sky News the surplus will be scheduled a year earlier – somewhere between $5bn and $7bn.
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It’s a public holiday in the greatest nation on earth, also known as Queensland, and Anthony Albanese is up there for Labour Day marches and to talk infrastructure spending (or what he says is the lack of it).
Speaking from Townsville, this was what Albo had to say about the tax-to-GDP-ratio:
Well we will wait and see what is in tomorrow’s budget. But what we know is that since 1980 if you actually look at taxes as a proportion of the GDP, the political party that is the high-tax party is the Liberal-National party Coalition. They are the party that have presided over increases in taxes. Labor will examine any proposals that are there in the budget tomorrow and make our announcements when we do a budget reply on Thursday or at some stage before the election. But one thing is very clear – Labor has got more policy out at this stage of the electoral cycle than any opposition in living memory. We have out there clearly outlined our policies on changes to the imputation, on changes to capital gains and negative gearing for investment properties, on changes to the amount of tax that can be written off for accountants’ fees. We have got that out there in a very transparent manner and we will be very transparent about all of our tax policies prior to the election.
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Richard Di Natale is next on the here-is-what-I-think-about-the-budget-I-haven’t-yet-seen-but-let’s-be-honest-we-all-know-what’s-in-it speaking list.
He says the government should close the loopholes that allow the super rich and corporations to avoid paying tax, and actually commit to investing in public services.
“This is not a budget which needs tax cuts, it is a budget which needs investment in schools, in hospitals, in the NBN.”
He says the Greens will not be supporting any tax cuts.
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As promised – the not-quite-ready budget tree.
Is it climate change? Is it also dead to Peter Dutton and just decided not to bother? Is it just over the whole damned thing and just can’t even?
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Chalmers was just asked about Wednesday’s high court ruling, which will decide the fate of Katy Gallagher – and, by default, the political futures of Susan Lamb, Josh Wilson, Justine Keay and Rebekha Sharkie.
The high court will decide what constitutes the “reasonable steps” a wannabe MP must take when divesting themselves of their dual citizenship, and whether the confirmation needs to come before nominations close, or is allowed after.
If it decides confirmation must come before nomination closes, then Labor will be fighting byelections in Longman, Braddon and Fremantle – as well as Perth.
Tim Hammond has not yet officially resigned – I’m going to take a punt and say that will come on Thursday, once the high court dust has settled. Will we see a super Saturday of byelections, just a year out of from the general one? Let us know your predictions in the comments.
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Jim Chalmers wants to take a look at the budget before he slams it. But he doesn’t think he’ll like it:
They will go to the wall to defend big tax breaks for property speculators and family trusts and dividends imputation and all those sorts of things. I think the budget tomorrow night will be all about Malcolm Turnbull’s tax handouts for the top end of town. So will be election frankly that follows it.
But he can’t answer any questions on it, because he hasn’t actually seen the budget as yet.
Which follows Mathias Cormann this morning, who also spoke to the media about the budget to say that it was good, but he could not actually answer any questions on the budget until after the budget was delivered.
Budget eve: the never ending talking circle
.@JEChalmers on the budget: If @TurnbullMalcolm doesn't reverse his cuts to hospitals and schools, it will show he has learnt nothing from the first four failed budgets.
— Sky News Australia (@SkyNewsAust) May 7, 2018
'No election eve budget can make up for the damage done.'
MORE: https://t.co/IEeAmIvpbo #newsday pic.twitter.com/oaIgOOLvqW
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Jim Chalmers is pointing out that debt is almost double what it was when the “debt emergency” was first posited by the government – “and we don’t hear a peep”.
He also mentions the family kitchen table.
Who are these families standing around kitchen tables? What family has time to stand around a kitchen table and talk about the budget? We communicated on notes, stuck to the fridge, in my family, because everyone was always working, or at school. You know, like a normal working family. In fact, we didn’t even have a kitchen table. Who has room for that? We had a bench.
Sorry – it’s day one of this week and I am already over the hubris.
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Here is Scott Morrison talking about that fantastic job. And also kitchen tables. Because when you think of strong economies, you obviously also think immediately of kitchen tables:
A stronger economy, is what this budget is about. It’s what the Liberal and National parties believe very strongly, because that’s what guarantees everything else. That’s what guarantees the jobs, that’s what guarantees the incomes – as families sit down around their kitchen table. A stronger economy, is what builds their budget – and this budget is about a stronger economy.
More jobs, to guarantee those essentials services that Australians rely on. In the health portfolio and what we saw yesterday, keeping the Pharmaceutical Benefits Scheme and what we’re able to do there. Whether it’s the record funding in education and in schools. In all of these areas, national disability, aged care – a stronger economy is what pays for that. Businesses going out there and being successful, going forward, employing people and this Budget is about driving that forward.
And as you say Prime Minister, it’s always about living within our means as a government. And this is a government that does that. We’ve got a clear set of guard rails. A guard rail on keeping spending under control, and a guard rail in keeping taxes under control.”
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“It’s a great budget, Scott. You’ve done a fantastic job,” Malcolm Turnbull says in a totally normal start of cabinet meeting featuring half the press gallery.
Jobs and growth is not just a slogan, yadda yadda yadda, we have delivered on promises, etc, etc, etc, Australians will be very happy.
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From Mike Bowers this morning:
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The cabinet has come together just before the budget is handed down – and as they chat, Chris Bowen had a few things to say about Scott Morrison’s tax-to-GDP ratio:
The greatest failure of the government’s official “fiscal strategy” has been the persistent watering down of its 2013 commitment to get to a surplus of 1% of GDP by 2023-24.
From his statement:
Over the years [the government] stated:
- “… returning the budget to sustainable surpluses that build to at least 1% of GDP by 2023-24” (2013-14 MYEFO)
- “… deliver budget surpluses building to at least 1% of GDP by 2023-24” (2014-15 MYEFO)
- “… deliver budget surpluses building to at least 1% of GDP as soon as possible” (2015-16 MYEFO)
Now it seems the government is on the verge of breaking another one of the key planks of its fiscal strategy – that improvements to revenue due to improved economic conditions should be “banked as an improvement to the budget bottom line” and not spent.
***End statement***
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Also in the budget – $100m for something which will be announced in September.
From Paul Karp’s story:
Kelly O’Dwyer has confirmed that Tuesday’s budget will set aside funding for a women’s economic security statement to be delivered in September.
On Monday the minister for revenue and women said there would be “a lot in the budget for millions of Australian women” but the Coalition would further address issues including workforce participation, pay equity and superannuation with a separate package.
The Australian Financial Review reported that “significant” funding of more than $100m would be set aside in the contingency reserves of Tuesday’s budget for the economic security statement.
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Just having a look at the Peter Dutton press conference from earlier, and it seems like Air Vice-Marshall Stephen Osborne had something interesting to say about Operation: Sovereign Borders – in that he appeared to endorse it, while questioning attempts to change it (which is unusual for a public servant).
It’s built on a very particular structure and if we make any changes to that structure, I would have some concerns and we will leave it at that.
Dutton cut off any further questions to Osborne on the issue, and took them himself.
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Mike Bowers is heading out to get a picture of the Budget Tree for you, because, horror of all horrors – it is not ready yet.
For those unfamiliar with the Budget Tree, it’s the one which stands in the background of all the broadcasts on budget day. Usually it is a glorious flame red by this time of year.
Today, it’s less Rita Hayworth and more Miss Havisham.
But it’s failure to launch was predicted:
Bold prediction for those on the insider beltway - budget tree will be late this year pic.twitter.com/BDzNNMXgCv
— Tom Connell (@tomwconnell) April 17, 2018
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This was the crux of Dutton’s final statement:
By Bill Shorten being out there saying that New Zealand is on the table, people realise that New Zealand is a back doorway into Australia. They realise New Zealand is a comparable society to Australia. It has a similar welfare system, similar health, education offerings, housing, etc. It is marketed in the same way that Australia is as a positive destination. If Labor thinks that this problem has gone away, that they can now water Operation Sovereign Borders down, Bill Shorten is making the same mistake that Kevin Rudd made when he undid John Howard’s policies and if Bill Shorten thinks he can give a nudge and a wink to the left of the Labor party before an election and he believes he is going to win that election and water these policies down, that is exactly what Kevin Rudd did and it resulted in 1,200 people drowning, 8,000 kids in detention, 17 detention centres were opened and the Australian public rightly was angry because there were billions of dollars wasted and we are still cleaning up that mess today.
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Peter Dutton is still talking.
About Labor.
This is going to be a really, really long week.
Some context for those comments:
Labor’s policy platform is to ensure processing for onshore arrivals is done within 90 days.
As for offshore processing, well, there isn’t a time period on that as yet. Just that it is done “as quickly as possible”. There has been some conflating of the onshore and offshore processing platforms – but at this stage, there is no time limit placed on offshore arrivals.
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Peter Dutton cautions Labor on changing border protection policies
Peter Dutton is using his press conference to slam Labor’s border protection policy:
Just because Australians don’t see on their television set every night the boats coming as they did under the Labor party, it has meant the problem has gone away. The Australian public understand that the government needs to assert a sovereign right in relation to border protection and border security matters. This government has been able to clean up the mess that we inherited from the Labor party.
The problem has not gone away. One of the most puzzling aspects to the Labor party’s approach at the moment is Bill Shorten speaking out of both sides of his mouth when it comes to border protection policy. He says one thing to the press and that is that he has got a tough stand on border protection matters and yet when he is in the Labor party conference, he is telling people there will be a softly, softly approach to border protection policy if the Labor party is to win government. It is a complete outrage.”
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Peter Dutton is about to hold a press conference on this: (from the AAP report)
More than 130 Sri Lankans believed to be heading for Australia and New Zealand were intercepted when authorities halted the modified tanker on Tuesday off the coast of southern Johor state, national police chief Mohamad Fuzi Harun said in a statement.
He said the immigrants included 98 men, 24 women, four boys and five girls.
Dutton said it was clear the threat of people-smuggling syndicates remained and it was important to keep Australia’s borders strong.
Police also raided a fishing boat used to transport the migrants to the vessel and detained three Indonesians and four Malaysians on board, he said. Another five Malaysians were nabbed for suspected involving in the smuggling syndicate.
A total of 127 Sri Lankans will be charged for entering Malaysia illegally while nine Malaysians, four Indonesians and four Sri Lankans will be investigated for human smuggling, Fuzi added.
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Fun bit of trivia for you: this is Mike Bower’s 29th budget lock-up.
Twenty-nine. They grow up so quickly.
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Labor is also promising a lot of rail spending. Anthony Albanese outlined the opposition’s plans:
In coming years, states will roll out projects including the Melbourne Metro, Brisbane’s Cross River Rail, the Perth METRONET, the Western Sydney Rail and the Melbourne Airport Rail. Then there is the Inland Rail freight link from Brisbane to Melbourne, and, potentially, the High Speed Rail Link from Brisbane to Melbourne via Canberra and Sydney.
Which of course means we are now virtue signalling over public transport:
Why do you have to "believe" in rail? Can't you just build it? #auspol https://t.co/QlvA2Tduty
— Katharine Murphy (@murpharoo) May 6, 2018
Malcolm Turnbull snuck in a hi-vis press conference this morning.
He was announcing Sydney rail network upgrades – “a $400m project to duplicate the remaining single-track section of Sydney’s Port Botany rail line”.
I only mention it because of this gem from Paul Fletcher:
Malcolm Turnbull is a city-shaping prime minister.
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Side note away from the budget for just a moment:
Rob Harris from the Herald Sun has done quite a bit of work on Lottoland – one of the foreign gambling sites which allow punters to bet on the outcome of state sanctioned lotto games.
The government followed an international trend and moved to ban it.
But Lottoland has not given up:
Lottoland hires Hawker Britton. Next week...
— Jackson Gothe-Snape (@jacksongs) May 6, 2018
The CEO of Lottoland Australia, Luke Brill, is holding a press conference at Parliament House today to oppose a Bill banning bets on lotteries and keno.
Time: 11.40am TODAY
Place: Senate Courtyard (Federal Parliament)#auspol https://t.co/VUjloE50bf
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Right. Now that all the technical problems have been sorted (my computer is as reluctant as me on Mondays), let’s get back to it.
Andrew Leigh was on Sky this morning, with a few things to say in response to Scott Morrison’s tax-to-GDP ratio:
The Coalition’s tax-to-GDP ratio is effectively going to be used as their excuse for not cracking down on multinational tax loopholes and giving massive handouts to banks. It’ll be their excuse for running razor-thin surpluses rather than the strong budget surpluses they were promising just a couple of years ago.
Labor supports taxes being as low as possible in order to fund the services we need and pay down debt, but let’s also focus on how we raise the revenue – close the multinational tax loopholes, don’t give massive handouts to the big end of town and that allows you then to fund our schools and hospitals the way Australians demand.
The economics of the company tax cut simply don’t stack up. We see in the government’s own figures, 0.1% increase in household income in the 2030s. You look now at the United States where the promised wage rises simply aren’t eventuating. You look at the argument for the link between productivity and company taxes and it’s just not there. This is not a good way of spending Australians’ resources. It’s no way to invest in the future, to rip money out of our schools and give it to the big end of town.
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The government appears quite focused on the “don’t get your hopes up too high about tax cuts” message.
Kelly O’Dwyer, speaking to the ABC this morning, hints tax cuts will be there, but adds the “affordable” message again:
Any decision taken by the government does need to be affordable. The government does need to be able to live within its means, but we also have to understand that in providing tax cuts, you are simply allowing people to keep more of their hard-earned income.
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It’s not all budget though.
The energy minister, Josh Frydenberg, has just announced a review into the nation’s fuel stocks. From the release:
The Turnbull government will assess Australia’s liquid fuel security to help deliver affordable and reliable energy.
Liquid fuel, such as petrol, diesel and jet fuel, accounts for 37% of Australia’s energy use, including 98% of transport needs.
Over the past two years, we have been focused on securing reliable and affordable electricity and gas. It is time now to consider Australia’s liquid fuel security.
The assessment is the prudent and proper thing to do to make sure we aren’t complacent. It should not be construed as Australia having a fuel security problem.
The comprehensive assessment will look at how fuel is supplied and used in Australia, including our resilience to withstand disruptions both overseas and in Australia.
We have not experienced a significant disruption to fuels supplies since the Opec oil crises in the 1970s, but there is no room to be complacent.
Australia’s liquid fuel supply increasingly depends on overseas sources and relies on market forces to maintain reliability and affordability. The assessment will identify whether the government should take further steps to ensure Australia’s domestic fuel supply is reliable.
The assessment will also help inform Australia’s plan to return to compliance with the International Energy Agency’s emergency stockholding obligations by 2026.
The assessment of liquid fuels will be completed by the end of 2018 and contribute to a broader consideration of energy security across liquid fuel, electricity and gas supplies in the National Energy Security Assessment by mid-2019.
***end statement****
tl;dr We haven’t had a big disruption to our fuel stocks for decades, but if we did, we could be screwed, so we should probably check on that.
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The chatter around tax cuts has been loud and impossible to ignore.
Scott Morrison has warned they won’t be “mammoth” – that’s in relation to low and middle-income workers.
However, he says they will be “affordable”.
From Paul Karp’s story yesterday:
On Sunday the treasurer told Channel Nine’s Today Show that the Turnbull government had flagged for months that its priority is “delivering tax relief for low to middle-income earners”.
“They have been doing it tough, it’s been some time since they have had a decent pay rise,” he said.
Morrison said that low and middle-income earners “should be the first to whom we seek to provide tax relief”, leaving open the possibility that higher-income earners will benefit from the income tax cut plan later on.
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Good morning and welcome to budget eve
I hope everyone had a great break and snuck in some relaxation time, because you are going to need your wits about you this week.
It’s budget time, and while Scott Morrison has made it clear he is most definitely not Santa Claus, in what was quite possibly the most ridiculous own-goal in some time, the government is also looking to the next election. Which means budget goodies, in some form or other.
So far, it is all of the tax and infrastructure kind. Big spending infrastructure announcements have been dripping out over the last couple of weeks – the Melbourne airport rail line and $3.2bn in WA among them – but really, tax has been what has been dominating the agenda.
This morning, Morrison unveiled his plan to try and bring Labor to heel on taxes, through this story in the Oz.
He has described it as a “speed limit” on taxes, and by enshrining a 23.9 % tax-to-GDP ratio in legislation, it either makes Labor have to repeal it or maintain it.
Paul Karp has this follow:
The treasurer, Scott Morrison, describes it as the “speed limit” on taxes but a new paper says the Coalition’s 23.9% tax-to-GDP cap is an “arbitrary” limit that will push the government to make austerity cuts to fund new programs.
While a dramatic improvement in revenues has given the Coalition room to ditch the planned $8bn Medicare levy increase and offer income-tax cuts, the Australia Institute has warned in a briefing note that the combination of a limit on tax and a surplus target will necessitate spending cuts in future.
The paper echoes concerns from the shadow treasurer, Chris Bowen, about eroding the revenue base, as Labor prepares to match “targeted tax relief” and promise larger surpluses by raising revenue in other areas.
But along with tax and infrastructure, “surplus” has returned to the buzzword pool. Labor’s promise to bring the budget to surplus earlier, while increasing spending and cutting taxes, thanks to its $68bn franking credits overhaul, seems to have sent the government hunting for ways it too can bring on a surplus earlier.
It looks like better than expected revenue may help with that. But only just.
All will be revealed tomorrow evening. But first, strap in for a day of speculation and snark, as both sides prepare to line the budget battlefield.
Burning comments can find their way to me @amyremeikis on Twitter, or you’ll find updates in the story section of @pyjamapolitics on Instagram. You’ll find the amazing Mike Bowers on Twitter at @mpbowers or his gram, @mikepbowers. I’ll be lurking in the comment section when I have time, so play nicely.
I hope, as always, that you have had your coffee.
Ready? Let’s get started!
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