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Frydenberg’s big hip-pocket giveaway

Budget spending is temporary, and targeted for political gain ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

It’s hard to think of anyone who doesn’t get something out of Treasurer Josh Frydenberg’s fourth budget.

High earners with big cars will enjoy the temporary cut to fuel excise, for pensioners and those on benefits there’s a one-off $250 cost-of-living bonus, and for Australians earning up to $126,000 there’s a $420 boost to the tax offset, giving them up to $1,500 from July when they put in their tax returns.

Each of the measures is temporary and targeted, for what Michelle Grattan says is political gain. The election could be called within days, but not before the Senate approves the most urgent of the measures (those relating to petrol and the $250 bonus) in its last scheduled sitting for the week on Wednesday.

Despite this generosity, and, as I argue, in part because of earlier generosity, the budget forecasts show the deficit continuing to fall, and government debt sinking as a share of the economy after 2026.

Frydenberg said this would happen. Big debt-funded spending on measures such as JobKeeper would ensure the economy grew fast enough to boost income from taxes, drive down spending on benefits, and drive down debt as a proportion of GDP.

The budget figures show even the treasury has been surprised at how rapidly this has happened. An unexpected surge in jobs growth and a dive in unemployment have lifted the medium-term budget balance by $98.5 billion since December.

Richard Holden believes the government should have banked more of extra revenue, pointing out that spending on defence is set to grow rapidly and go higher and that spending on the National Disability Insurance Scheme is set to grow from $31 billion this year to $46 billion by 2025-26.

While this might mean that whichever party wins the next election will have to cut back, it is also true Frydenberg has left money on the table. Many of the revenue forecasts are conservative, they assume commodity prices will rapidly fall. If they don’t, the next government will have more revenue to play with than the budget suggests.

It’s rare that a pre-election budget takes hard decisions, and Nigel Stapledon argues that on housing this one does not. He says the extra 25,000 places per year added to the First Home Loan Deposit Scheme will push up prices further, although not by the full value of the assistance.

Frydenberg's big hip-pocket giveaway 1

Peter Martin

Section Editor, Business and Economy

Frydenberg's big hip-pocket giveaway 2
Frydenberg's big hip-pocket giveaway 3

Josh Frydenberg’s budget is an extraordinary turnaround – but leaves a $40 billion problem

Richard Holden, UNSW Sydney

The 2022-23 budget is the result of a good plan, well executed. But whichever party next takes government must close the deficit gap – without resorting to austerity.

Frydenberg's big hip-pocket giveaway 4

Budget 2022: Frydenberg has spent big – but on the whole, responsibly

Peter Martin, Crawford School of Public Policy, Australian National University

The budget forecasts and unemployment numbers show Josh Frydenberg’s COVID support spending has paid dividends.

Frydenberg's big hip-pocket giveaway 5

A cost-of-living budget: cuts, spends, and everything you need to know at a glance

Michael Hopkin, The Conversation; Wes Mountain, The Conversation; Chynthia Wijaya, The Conversation

Everything you need to know about this year’s federal budget in 5 easy-to-read charts.

Frydenberg's big hip-pocket giveaway 6

Cheaper petrol, cash handouts in Morrison government’s vote-buying budget

Michelle Grattan, University of Canberra

Weeks out from a possible election, the federal government has delivered a voter-friendly budget filled with giveaways

Frydenberg's big hip-pocket giveaway 7

Health budget 2022 spends a little on favoured interest groups but misses a chance for real reform

Stephen Duckett, The University of Melbourne

Overall, health fared poorly in this year’s budget.

Frydenberg's big hip-pocket giveaway 8

Budget expands deposit scheme for first home buyers: a second-best option, with risks down the road

Nigel Stapledon, UNSW Sydney

The federal government’s expanded first home loan deposit scheme will help those who qualify, at the expense of those who don’t.

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