October 7, 2020

Federal politics

The budget that wasn’t

By Russell Marks
Image of Josh Frydenberg at Parliament House

Josh Frydenberg at Parliament House. Via Twitter

What if Frydenberg had actually created a budget for the times?

Amid cascading applause from within parliament and across the nation, Treasurer Josh Frydenberg ensured his legacy last night when he delivered what some commentators are describing as Australia’s most visionary budget since Paul Keating’s risky mini-budget in May 1987, and perhaps since Federation. Calling it “Australia’s prescription for recovery and rehabilitation”, Frydenberg adeptly tapped into Australians’ collective desire to emerge from the health and economic effects of COVID-19, but also to repair their politics, their society and their own sense of national esteem after two decades of fracture.

Frydenberg’s decision to structure his second budget around social health and vulnerable communities was as welcome as it was unexpected. “Young people are Australia’s future,” was his remarkable opening line, and he spent much of the next half-hour making the case that their future must be at the core of any policy calculations. “This has been a terrible and often tragic time for older Australians and their families,” he said at one point, referring to the sad fact that of the nearly 900 people who have died from coronavirus, the vast majority have been over 70 years of age. “But as we begin – as individuals, as families, as communities and as a nation – to look to a world beyond coronavirus, we must recognise that it is our children who will bear the brunt of the recession.”

“Many of us, in this place and across the country, have done extraordinarily well out of three decades of unbroken economic growth,” Frydenberg acknowledged with an uncharacteristic sweep of his arm. “That was an extraordinary period that owed much to an earlier generation of visionaries. It is testament to the legacy of Fraser, Hawke, Keating and Howard that it took a global pandemic to bring the boom to an end. Now, we must draw on their shared legacy, and indeed on that of earlier visionaries – Curtin, Chifley and the great Sir Robert Menzies. We must build on the future they bequeathed us. It is our duty – as conservatives, as Liberals and Nationals, as parliamentarians and as Australians – to create for our daughters and our sons the same kind of opportunities we enjoyed.”

This was the rhetorical set-up to what, in other contexts, might have been described as Australia’s biggest backflip. Frydenberg explained that the Morrison government would not be cutting taxes. “When the world changes, we change our policy,” the treasurer said simply. His paraphrasing of the economist John Maynard Keynes – the bête noire of the political right for half a century – was perhaps the evening’s greatest signal that Morrison and Frydenberg had decided to shelve the undistinguished point-scoring and politicking that had marked the Coalition’s last decade, and to commence a new era of cooperative nation-building.

“Tax cuts are not in anyone’s recession toolkit,” Frydenberg said. “We did not ask for COVID-19. We did not want this recession. But we must respond to it. And we are determined to make it as short and as shallow as we possibly can. Make no mistake, tax cuts remain Coalition policy. Just not in a recession.” Acknowledging the advice of economic experts over recent months, Frydenberg said tax cuts that favoured people earning over $100,000 were not in the national interest.

“We acknowledge the hard work and the dedication of those Australians who, no doubt deservedly, are earning good salaries,” he said. “We acknowledge the contributions you’ve already made to the national economic health through your taxes. But we’re sorry. We cannot deliver the tax cuts we promised you. We need to get money circulating through Australia’s economy, and ripping $260 billion out to benefit those of us who need the least help is not the way to do that. We hope you can see why we’re breaking our promise to you.”

It was the most disarming of the speech’s many disarming moments, one that recalled the rancour over previous, unacknowledged broken promises – Keating’s “L-A-W” tax cuts; Howard’s “never ever” GST; Gillard’s “no carbon tax”; Abbott’s “grown-up government” and “no cuts to education, no cuts to health, no change to pensions” – and somehow overcame them.

To everyone’s surprise, and doubtless not least his own, 49-year-old Joshua Anthony Frydenberg – child of a Holocaust survivor, tennis nearly-professional, Commonwealth Scholar, Zelman Cowen mentee and disciple of Australia’s New Right – then set about delivering what commentators have almost universally described as a classic Keynesian recession blueprint. “Old Keynes in a new, curious, and very welcome bottle,” was how one long-time observer of Australian politics famously put it overnight.

“No Australian government has ever been able to borrow at such low rates of interest,” Frydenberg said, “and we are determined to use that silver lining to help Australia out from under the dark clouds that threaten our future.” After all the bitterness, there was money for employment-rich industries, for social housing, for social security, for universities, for training, for public infrastructure, for public and mental health, for the arts, and even a little bit for climate change. “These are the soundest of investments,” Frydenberg said. “We expect to make returns. And the best thing about those returns is that they’ll be shared by all Australians.”

It is a long time since a treasurer was so lauded by his most hostile critics. But the praise wasn’t universal. Sky News Australia’s coterie of far-right pundits was dismayed at what more than one called a “betrayal of conservative values”, and they repeated their criticisms in the News Corp papers this morning in op-eds lamenting the trillion-dollar public debt and the $213 billion deficit Frydenberg foreshadowed. But the national mood, strangely, doesn’t seem to be with them.

A keen student of politics and history, Frydenberg reminded the ABC’s 7.30 program last night that Australia’s debt-to-GDP ratio had reached 120 per cent in 1945 and 215 per cent during the Great Depression. “No doubt they were tough times,” he said, “but people and governments got through them with cooperation and good policy. We’re not planning to get anywhere near those figures, by the way. And I really must emphasise this point, because it’s a point that’s been lost amid all the fighting over the last decade or two. Government debt is manageable. It’s pooled risk. It’s not like private debt or household debt. We’re borrowing at record low rates. We’re investing in Australia’s recovery and rehabilitation, in Australia’s future. It would be irresponsible of us to not do that.”

Now it’s over to Opposition Leader Anthony Albanese, who will deliver his reply tomorrow evening. There are still many matters to address, the climate emergency and Australia’s rampant per-capita emissions not least among them. But much of whatever wind had been in his sails was swept away by Frydenberg’s stunning about-turn last night. Since Albanese’s election to parliament in 1996 – at the same election that won John Howard the prime ministership – he had been fighting an ever more bitter culture war against a Coalition that looked for inspiration to the American Republicans. As they descended into alt-right absurdity, so did the Coalition threaten to. Now, suddenly and brilliantly, Frydenberg and Morrison have changed the rules of the game. Suddenly, they are prepared to govern in the national interest. Suddenly, they are prepared to lay down their rigid ideologies and to work with experts and political opponents. Of all the political challenges Albanese could have anticipated, a conciliatory and visionary Coalition government was surely not among them.

Russell Marks

Russell Marks is a lawyer and an adjunct research fellow at La Trobe University. He is the author of Crime and Punishment: Offenders and Victims in a Broken Justice System (Black Inc., 2015). 

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