Thu May 13

Politics with Michelle Grattan: Simon Birmingham and Jim Chalmers on a big spending budget

Written by Michelle Grattan, Professorial Fellow, University of Canberra

This year’s budget, handed down on Tuesday, boasts plenty of winners and minimal direct losers. Spending is lavish, with the government doing its utmost to avoid offending voters.

The big spending commitments include:

$17.7 billion for aged care over five years
$2.3 billion for mental health
$1.7 billion in changes to childcare
$1.1 billion for women’s safety
$1.9 billion for the rollout of the COVID vaccine
$20.7 billion in support for business through tax breaks
$2.7 billion in new apprenticeships
$15 billion over a decade for infrastructure
$1.2 billion for the promotion of a digital economy.

Simon Birmingham, finance minister, and Jim Chalmers, shadow treasurer, are our post-budget guests on the podcast.

This is Birmingham’s first budget as finance minister. Usually, it’s the finance minister’s unpopular task to find spending cuts – but this time, these are minimal.Birmingham’s message to critics on the right of politics, who are claiming the government has given up the debt fight, is:

“You don’t manage to achieve budget sustainability and ultimately balanced budgets some time down the track without actually maintaining and having a strong economy that has strong jobs growth. And so this time, where we have an uncertain international environment [and] fragility in terms of confidence, because of those global uncertainties, we need to make sure we maintain the COVID recovery.”

And he notes, “debt is actually forecast to be lower over each of the next 10 years than was the case in last year’s budget.”

The budget includes assumptions that the international border will open around mid-2022, and that the Australian population would be fully vaccinated by the end of this year. Asked how “solid” these assumptions are, Birmingham says:

“We have used best assumptions that we think are cautious assumptions and realistic ones. But we equally acknowledge with honesty that these are challenging times, uncertain times.

"And so they are just that - assumptions.”

On the issue of debt, Chalmers says it’s not just the level of the debt that matters, “it’s the quality of the spending”.

He says the budget is “riddled with rorts” and “weighed down with waste”.

“There are new slush funds in last night’s budget, and that means we’re not getting the bang for buck that we need to be getting in terms of jobs and other other important objectives.”

Labor has homed in on flat wages, arguing working Australia’s are “copping a cut in their real wages”.

Ultimately, the budget has failed working people, says Chalmers.

“If the government is prepared to intervene in the economy as they have been and spray around what is an extraordinary amount of money, then you’d think that working people would actually get a slice of the recovery.”

“It’s a pretty extraordinary admission of failure.”