Leaks and speculation primed the news cycle a week ahead of Federal Budget 2018, with hints that low to middle-income earners will receive income tax cuts, aged care will receive a funding boost and debate over companies receiving generous tax cuts.
But many economists and even some MPs are asking why the Government is seemingly overlooking Australia’s massive debt – a debt that has seemingly been misted over by the fog of Coalition rhetoric and political sleight of hand.
Sure, there have been significant improvements in tax collection, but that ‘surplus’ we all keep hearing about never seems to materialise. And it won’t if the Coalition starts redirecting the so-called ‘rivers of gold’ claimed by Chris Richardson, a leading economist from Deloitte Access Economics, to flow into the nation’s coffers.
At least some MPs are awake to this. Some Senate powerbrokers are expected to block short-term ‘sweeteners’ such as income tax cuts, if these cuts put the Budget at risk.
“If there are to be personal tax cuts, they should be designed to provide immediate relief for hard-pressed low and middle-income earners, and should not jeopardise the task of bringing the Budget back to balance and our burgeoning debt under control,” said independent MP Tim Storer.
The priority, they say, is to prevent government debt climbing to $365 billion. But no one wants to hear about that. Voters want tax cuts, and this is a Government playing the election game. It seems the Coalition may use this budget to curry favour from voters instead of concentrating on the job at hand. Paying off the national and foreign debt should be a priority.
A recent Newspoll also revealed that Australians believe that paying down the nation’s debt is more important than personal income tax cuts, although more health funding is a little higher on their list.
The poll showed 27 per cent of Australians believed health should be the priority in Federal Budget 2018, with 26 per cent favouring reducing debt and deficit, 15 per cent wanting income tax cuts, 15 per cent preferring increased infrastructure spending and 12 per cent wanting more money for schools.
Turnbull frontbencher Angus Taylor says Australians want leadership and a government creating employment, driving investment, but also living within our means.
“That is absolutely crucial. I think that is where we are absolutely on target, we are working extremely hard every day, and I think over time Australians will reward us for that focus on economic leadership,” said Mr Taylor.
Having lost 30 Newspolls in a row, it’s no surprise that the Government wants to splash a bit of cash around to impress voters. Perhaps though, it should take notice of the fact that Bill Shorten has also lost 30 Newspolls in a row as preferred prime minister.
Malcolm Turnbull has this ace up his sleeve, so is it really necessary to hand money back at a time when, as a nation, we should be saving?
No one is saying that an income tax cut would not be welcomed. It will definitely help some households already struggling to keep up with the increased cost of living. But, the proposed $10 billion of tax cuts would effectively consume any of the savings the Government has made in the past year, so how does that help us as a nation in the long run?
It doesn’t. And once the deficit starts creeping up due to decreased revenue those income tax cuts will be taken away or, worse, turned into increased taxes.
But hey, so long as it gets the Government re-elected next year.
The Coalition would be better served showing the voters that it is a responsible government, with a strong leader and a savvy Treasurer who delivers on promises and won’t trade votes for a quick sugar hit.
What do you think of the direction of Federal Budget 2018? Is it more about politics than economics?