Treasurer Josh Frydenberg is a master of looking in the right direction to show he understands but ultimately fails to do the work to make the essential reform decisions, resulting in disappointment.
The budget is a classic example.
Small business can be thankful for what it got, like increased write-offs for digital spending and training, but, after next financial year, it will lose the COVID-19 support of immediate expensing of all spending.
A step in the right direction which leaves business ultimately in the red.
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The bottom line is the government has since 2020 spent $314 billion in pandemic responses to help boost the economy, which combined with record low interest rates, has boosted the economy and tax receipts to the tune of $143 billion.
No revolution here, and remember the economy is just returning to 2019 pre-COVID levels, which were well short of groundbreaking.
Only $39 billion of this windfall is being spent on election handouts, which is again a step in the right direction because at least 73% of the windfall is going to budget repair. But $3 billion of the spending is directed at temporarily cutting the fuel excise.
When you are in a hole at some point you need to stop digging.
To put the handouts in context, they are also a smaller percentage of GDP at 0.7% than the 1.5% spent by the Howard government in its failed 2007 election pitch.
Small businesses, and indeed the driving public, will welcome cheaper fuel for the next six months but as an incentive, it is totally indiscriminate, and as a long-term boost for the economy almost irrelevant.
Sure it benefits small business but it also benefits wealth big business chiefs, the young and the old.
It is hardly the targeted spending Frydenberg talks about and once again shows both how little faith the Liberal Party has in the operation of markets — and what little thought is given to long-term policy like encouraging the switch to electric cars.
Oil prices have risen because of Russia and like markets, the cycle will change.
Thanks to the COVID-19 handouts, the government can claim to have cut female unemployment to 3.7% and participation now stands at a relatively high 62.4%.
Structural reform beckoned in the form of increased subsidies for child care, which would encourage more female participation, and again Frydenberg looked the right way but just didn’t take the big step.
Paid parental leave will be increased from 18 to 20 weeks and can be taken by either of the parents, which is a tick and a cross, because it also means men lose the two weeks on offer now on a take it or lose it basis.
There is no superannuation paid on parental leave and there were zero improvements to help child care, even though KPMG figures show the cost of increasing the subsidy for those earning under $80,000 would cost $5.4 billion and boost the economy by $7.4 billion.
Increased spending on child care delivers in terms of improved education, more female worker participation and in the process, creates productivity enhancing reform.
As Peter Strong has argued in these pages, if the government was serious about skills it would work sector by sector asking what is needed and responding, rather than small handouts to look as if it is doing something.
This is what is needed to boost the economy in the long term, not yet more band aids to address short-term political issues.
Consider too economist Saul Eslake’s discovery that the federal government has worked around the GST payments to the states to give an extra $19 billion to the Western Australian government.
Thanks to its iron ores riches, WA is about the only government in the western world in surplus right now, yet the feds are making a special payment to solve political issues.
Forget the excuse about the political cycle and forthcoming election — this was yet another wasted opportunity in delivering sustainable economic growth through productivity enhancing reform.
No wonder the budget tips business spending to top 9% next year falling, to 1% in 2024.