New tax cut leads cost-of-living measures in Labor’s budget

ABC NEWS (Australia)

Economist and Radio National correspondent Peter Martin says Treasurer Jim Chalmers played it safe with spending, ahead of the election.

Transcript

00:00He got a lot of, you know, about $30 billion extra coming in, because iron ore prices are

00:08a bit higher than they'd expected that usually happens, and employment was a bit stronger

00:12than they expected, so he had more tax money coming in.

00:16He wanted to spend as much of it as he could, and he spent almost, but not quite all of

00:22it, and that way he hasn't made the deficits forecast for future years any worse.

00:27Whether or not they're good is something you could argue about, but he wanted not to be

00:32seen to make things worse, but to do as much as he could to support the economy, and also

00:38I suppose for political reasons as well.

00:42He could have bought a lot with those tax cuts.

00:44He could have bought a lot with $17 billion.

00:48He could have increased the JobSeeker allowance substantially.

00:53He could have given, you know, supported batteries to ease our energy transition.

00:59You could have done a lot.

01:01They've chosen to do it this way.

01:03Look, I don't think we were ever going to expect anything reformish in a budget that

01:08they didn't even expect to deliver, and, you know, before an election.

01:15I think because there's so much talk about bracket creep, he says he'll give back bracket

01:21creep for the next two years because of those tax cuts, but he hasn't given back the bracket

01:26creep we've had before that.

01:27I think there'll be pressure on him in the next term, there'll be pressure on tax reform,

01:31but pressure to remove the issue of bracket creep, to take it off the table by indexing

01:38taxes.

01:39We tried that once under the Fraser government.

01:41He tried it for a year or two and decided that automatically giving people back bracket

01:46creep earned him no credit, but the time might be right to try again.

01:51It happens in Canada, it happens in Germany.

01:53There the government doesn't get thanked for what they shouldn't get thanked for, which

01:58is, you know, people paying the same tax as a proportion of their income as they were

02:02the previous year.

02:03Things aren't better than expected.

02:05That's the impression you'd get from the words used in the statement.

02:09It's certainly not the truth.

02:11It's not what you get if you read the numbers in the statement.

02:14So in the budget, a year ago, they expected economic growth of 2% this year.

02:20In the December budget update, they revised it down to 1%.

02:25I call that, no, they revised it down to 1.5, I call that a big revision, and they've revised

02:31it down further to a bit over 1% this time.

02:35That's a very big revision down.

02:37The economy is beyond doubt weaker than expected in the budget, and just three months ago.

02:45That's why they're spending a lot, as much as they can, for political reasons, but also

02:49because we need support.

02:51Now they do forecast, as they forecast before, that things are going to get better.

02:55They're just pushed out when things are going to get better, and you know people get a bit

02:59suspicious of that, you know, I'm always going to improve in six months' time.

03:03It's a bit like that on the economy, so yes, we do need support.

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