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Here's what the Budget leaks have told us so far

Peter Switzer
24 October 2022

I’ve been writing about and covering Federal Budgets since 1985 in the media and apart from what’s precisely said, the only big difference is that the level of pre-budget leaks has grown exponentially! It’s all about managing the reaction and so PR experts have had a big impact on what we learn ahead of the Treasurer’s big night, which is usually on the second Tuesday in May.

This October Budget is because we have a new Labor Government, which follows an extraordinary economic era created by what followed after we learnt the world was set to be plagued by the Coronavirus in early 2020.

This is an abnormal budget for very unusual times!

So what have we been told so far? Try these revelations:

1. Economic growth will slump from 3.5% this financial year to 1.5%.

2. There is a revenue boom from strong growth, lower unemployment and high commodity prices to the tune of $100 billion.

3. But there will be no tax cuts because it would hurt inflation.

4. That will be 3.25% next year compared to 6.1% now but will fall to 2.5% in 2024-25.

5. Planned Morrison Government spending of $21 billion will be cut to pay for Labor’s ‘pet projects’.

6. The Coalition’s infrastructure spending will be cut by $6.5 billion and $3.6 billion will be lost from public service hiring, advertising, travel and legal expenses.

A big story of this Budget will be the impact of rising interest rates amidst many rises to costs for the Government. “Apart from the spiralling costs of structural programs, such as the National Disability Insurance Scheme, which needs another $8.8 billion over the next four years alone, Dr Chalmers revealed on Sunday that interest rates had caused the welfare bill to balloon by almost $33 billion more over the same period,” reported the AFR’s Phil Coorey. “Of the blowout, almost a third, or $11.8 billion, will result from a higher-than-anticipated cost of age pension payments, followed by $10.6 billion extra for JobSeeker payments and $4.4 billion more for family assistance payments.”

Welfare payments are linked to inflation by indexation and that 6.1% rise in inflation has made the Treasurer’s life a lot harder.

That’s the expected Budget story so far coming from leaks but as with most Treasurers, Dr Jim will pull a rabbit out his hat to give a positive surprise, especially for the Labor supporters who delivered the Albanese team to power.

However, new Treasurers do like to start with a horror budget to get the bad news over before the government starts to campaign for the next election in two and half years’ time. I’ve often argued that our national commitment to have a drink or two means short-term memory loss helps a Treasurer, such that many of the bad news items from the first budget are long forgotten by the time we go to the next poll, provided the economy hasn’t gone down the tubes over the three years of being in power.

By 2025, the forecasts suggest that the economy will be rebounding and the stock market would have staged a nice comeback over the preceding two years, which right now sounds perfect for the re-election of this Labor Government.

How this Budget hits business could be a curve ball that might ruin Labor’s re-election plans and will be an important test for Dr Jim’s first fiscal finance effort.

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