MUNGO MACCALLUM. Government rakes in the tax.

Sep 23, 2019

Glory Hallelujah. Let joy be unconfined. The budget is back in balance.

Except that it isn’t – we’re still about $700 million short. But near enough is good enough – certainly good enough to let an ebullient Josh Frydenberg predict more or less credibly that in nine months time, the sacred surplus can finally be delivered.

And if it can’t – if the iron ore price really tanks, or the windfall  tax revenue is not sustained, then we can always top up the figures by short-changing welfare, just as we did last year. So let’s party – we’re (nearly) back in the black.

Our treasurer’s excitement is understandable, because in fact there is not all that much to celebrate. The  good numbers have, as usual, little to do with him, which is perhaps just as well.

Cheering over a surge in tax collection hardly fits comfortably with his government’s mantra of letting the punters keep as much as possible in their own pockets, especially when the rate of receipts far exceeds that of the despised previous Labor administrations.

And bragging about how the result was driven by record job creation sits uneasily with the reality that the extra jobs have only been keeping pace with increases in immigration – the unemployment rate has actually gone up a little, with predictions of worse to come, and underemployment is now the highest on record.

And the melancholy truth is that the real economy – the one that affects real people – is in deep doo doo. Wages remain moribund and even the national accounts have stalled almost to a crawl.  Growth, and more importantly productivity, are stuck in the quagmire and both customers and investors are deeply unconfident.

The prospects of recovery are becoming dimmer by the day, with the Reserve Bank apparently resigned to the idea that it will have to reduce interest rates yet again – perhaps twice more – in the probably vain hope that it can provide a stimulus that the government resolutely refuses to offer.

If this does not work, there is no plan B anywhere in sight. The only way out of this impasse appears to rest on a Damascene conversion by Frydenberg and his leader; that having declared mission accomplished with their budgetary obsession, they may lift their myopic gaze towards the real economic problems and do something about them.

But to do that would in itself be an admission of defeat – a confession that all the slogans, the rhetoric, the denials and the bluster have been at best inadequate and at worst wrong-headed. Such honesty would involve breaking the habit of a lifetime, but that would be too miraculous even for Scott Morrison.

And as if to emphasise the point, the OECD has again downgraded its predictions of Australia’s growth rate, as well as pointing out the inadequacy of our response to reducing carbon emissions. Preposterously, Frydenberg says this is an endorsement of the government’s persistent and futile policies of pushing doors clearly marked pull.

But not to worry – we’re back in balance. On the edge of a precipice, perhaps, but we’re hanging on. So let’s bop till we drop – off the cliff.

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