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Josh Frydenberg's big-spending budget

May 12, 2021 • 15m 23s

Federal Treasurer Josh Frydenberg has handed down what is expected to be the government’s last budget before the next federal election. Today, chief political correspondent for The Saturday Paper Karen Middleton on what’s in the budget, and what it says about the government’s political priorities.

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Josh Frydenberg's big-spending budget

456 • May 12, 2021

Josh Frydenberg's big-spending budget

[Theme Music Starts]

RUBY:

From Schwartz Media, I’m Ruby Jones, this is 7am.

Last night, Treasurer Josh Frydenberg handed down the federal budget, laying out the government’s priorities for the year ahead and foreshadowing billions in new spending measures.

The budget was framed around steering Australia out of the pandemic - and makes some ambitious assumptions about how fast things will return to norma and how quickly the vaccine will be rolled out.

Today, Chief political correspondent for The Saturday Paper Karen Middleton, on what the budget says about the government’s political agenda and the likelihood of an election later this year.

[Theme Music Ends]

RUBY:

Hi, Karen.

KAREN:

Hi, Ruby!

RUBY:

How are you?

KAREN:

I'm tired, but good.

RUBY:

Where are you right now?

KAREN:

I'm in the office and I've been in the office for hours. We get locked in to read the budget papers under secure conditions. Normally, we're in a very large network of committee rooms in Parliament House, but because of Covid and the worries about putting people in close together, we've had a lock up for the second consecutive year actually in our own offices with a government official sitting nearby watching our every move and confiscating our phones and making sure that we can't transmit anything until the treasurer gets up to speak at 7:30.

Archival tape -- Josh Frydenberg:

"And I call the treasurer."

Thank you, Mr Speaker. Australia is coming back.

Hear hear...

RUBY:

And so Josh Frydenberg, the treasurer, has just delivered his speech. I think one way of looking at a budget is looking at the story that it tells us about a particular government and what their political priorities are. So what was Josh Frydenberg saying, what is the story?

KAREN:

I think the real message was, you know, we are the government that's keeping you safe, that we have a record of achieving success in fighting the Covid-19 pandemic...

Archival tape -- Josh Frydenberg:

"Because Australia’s fate could have been so much worse. The UK, France, and Italy have all contracted by more than 8%..."

KAREN:

And now that the government is saying it's working on our economic security as well. And certainly the figures in this budget are very strong, and it's showing that the economy is roaring back to life.

Archival tape -- Josh Frydenberg:

"Businesses big and small, keeping the economy moving. Team Australia, at its best, a nation to be proud of."

KAREN:

The prime minister had predicted a ‘V-shaped’ recovery and a lot of people doubted that and thought it would take a lot longer to bounce back from the pandemic than it actually is proving true in terms of the economy anyway. So the figures are very good and the government was very upbeat and saying, even though there are a lot of uncertainties in the year ahead, not least about when we can reopen the borders and get things moving properly, things are looking more positive, and certainly the government was trying to put that message front and centre.

Archival tape -- Josh Frydenberg:

"Our plan is working, Australia's economic engine is roaring back to life."

RUBY:

And what about the spending? What is the federal government announcing in terms of the big picture budget items?

KAREN:

There's a lot.

Archival tape -- Josh Frydenberg:

"Mr Speaker, the prime minister called the Royal Commission into Aged Care, Quality and Safety, it revealed shocking cases of neglect and abuse..."

KAREN:

Perhaps the top of the list is aged care in response to the royal commission's terrible findings about the state of our aged care system.

Archival tape -- Josh Frydenberg:

"Tonight, we commit seventeen point seven billion dollars in targeted and practical new funding to significantly improve the system."

KAREN:

Some 80,000 new home care packages and accepting most of the recommendations of the royal commission that it must be said, not all the ones that involve levies and taxes the government hasn't accepted, and in fact, one of the recommendations was that they needed 100,000 new home care packages. So the government hasn't gone quite that far, but there is still a lot of money for aged care.

There is another 2.3 billion dollars for mental health. Obviously, there's been a lot of focus on mental health through the pandemic, and there's an expansion of the Headspace networks to include Headspace centres for older adults, as well as for young people.

Archival tape -- Josh Frydenberg:

"We will spend a further 13.2 billion dollars over four years to meet the needs of Australians with a disability…"

KAREN:

And the National Disability Insurance Scheme is receiving another 13.2 billion dollars over the next four years to expand the scheme, the government still talks about it being fully funded. Successive governments have claimed it was fully funded, but the critics say that it isn't because it's such a massive scheme that it's growing exponentially. So it remains to be seen whether this is enough money to properly fund the NDIS, but certainly a substantial injection.

Archival tape -- Josh Frydenberg:

"Under the Coalition, the NDIS will always be fully funded."

KAREN:

We've got more money for more money for housing support. The first home buyers scheme that the government has introduced through the pandemic to make it easier for people to buy a home, for easier for people to buy, to access their superannuation to buy a home and subsidies for people to build new homes have all been extended and expanded.

Archival tape -- Josh Frydenberg:

"Mr. Speaker, sexual harassment is unacceptable in any context when it occurs in the workplace, it denies women their dignity as well as their personal and economic security."

KAREN:

There are a lot of measures in this budget that are aimed at either neutralising political problems that the government had or responding to concerns or focussing on its core constituents, like the rural and regional Australia, the farm sector and their big, big infrastructure projects as well. So overall, it's more a giving than taking away budget.

RUBY:

And what about the things that Josh Frydenberg didn't talk about, Karen? Were there any notable gaps here in terms of spending?

KAREN:

Well, it's interesting the way they've talked about the environment and energy, they’re very much emphasising their focus on a gas-led recovery. As the prime minister has said, there's a lot of focus on water, a national water grid and in the gas sector, focus on gas exploration and opening up the north Bowen and Galilee basins, not as much on the environment generally. The kinds of issues the government likes to talk about, like recycling and restoring our oceans are there, but not a great deal on climate change. There is money for renewables in the form of new technology investments, but the government is very much favouring carbon capture and storage and gas development. Clean gas, as they like to call it.

RUBY:

Ok, and Karen was there anything unexpected, anything that surprised you?

KAREN:

There were a couple of things that surprised me. There's almost half a billion dollars spent on upgrading Australia's onshore detention facilities and also on extending the use of the Christmas Island detention centre.

Now, that seems puzzling, given we haven't had a problem with asylum seekers arriving, in fact, nobody can get here much from overseas at all. So it's interesting, but the government has chosen to spend that money on detention centres. And there are a number of quiet but substantial savings measures in here. For example, there's an existing rule for newly arrived residents that they have to wait four years to access welfare payments, some welfare payments. And the government is extending that across almost all welfare payments for newly arrived residents.

That's going to save the government 600, nearly 700 million dollars over the next five years.

So while it is mostly a good news budget, there are some losers in there as well.

RUBY:

We’ll be back in a moment

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RUBY:

Karen, the budget relies on a lot of assumptions and some of those assumptions, if we look at them, can give us some insight into what other plans or policies the government might have. Can you tell me a bit about what assumptions were underlying some of these announcements and what we should take from that?

KAREN:

Well I think what we take is that the Covid-19 is still very present and some of the assumptions might be a little bit heroic because a lot of them are based around how we get ourselves out of the pandemic. We have to remember that we still have a vaccination rollout programme that's foundering and the government has a pretty heroic assumption that everybody who wants to be vaccinated is going to be vaccinated with two shots by the end of this year. Now, if you do the raw maths, it's hard to see how we're going to be able to achieve that without ramping up to the power of 10 and more our rollout, because we've only I think we've had two and a half million doses of vaccine have been administered so far. That's just one shot for most people who've received it. They're going to need two shots and the population is more like 25 million. So that alone is a difficult assumption to swallow, I suppose.

Uh the other assumptions include that the borders will reopen sometime in 2022, although we don't know exactly when it seems to be suggesting around the middle of the year, it talks about tourists starting to return early next year and but migration and population growth not returning really more substantially until later in 2022. So, you know, there's a lot about this budget that assumes we're going to be on a very good trajectory of getting out of the pandemic.

RUBY:

Mm and so, Karen, when you weigh up all of the measures in this budget and the policies that are underpinning it, what do you make of the scope and the optimism and ambition of what the government is trying to sell?

KAREN:

Well, I think there's a fair bit of ‘trust us’ about it. We, you know, we've managed the pandemic well so far. The economy is roaring back, as I say, so everything's going to be fine. And there is a bit of a sense of, you know, you just have to trust that that will be the case. A lot of these measures are temporary stimulus, either hangovers from the economic stimulus we saw through the year last year at the height of the pandemic in Australia, but also the extended measures, some more measures for business, for example, tax concessions for business, assistance for small business; it's all under the guise of stimulus or assistance in the context of Covid, and so some of it a lot of it is really just for the next 12 months. So what we're seeing is a government still taking short term steps and addressing problems with the whole lot of cash that this sort of windfall from the economy has produced.

RUBY:

Mm and there has been a lot of talk also about the fact that an election may follow this budget quite closely...

KAREN:

Yes, I mean, the election has to be between now and the middle of next year. Originally, there was speculation that the prime minister might want to go early. He's always denied that he would go this year and said that he would prefer to go next year. And early this year, when things started to go bad for him around the treatment of women and the government's attitudes and the polls started to slump, many of us who watched politics closely began to think that there was less of a chance that there would be an election this year.

Now I'm wondering whether, in fact, he might still call an election later this year. He's really ramping up the focus on national security and economic security. He's got a story to tell there. He's got a positive budget, even though the deficit has blown out massively. And this is where it's sort of unusual that a coalition government is no longer talking about getting the budget back into the black - we've gone further into the red than ever, and because we're in a pandemic that is now acceptable to a government, that would have always said that that was unthinkable.

So, you know, everything's sort of turned on its head. And I wouldn't be at all surprised if the government looks at the landscape and the prime minister decides that actually there is a sweet spot to go to an election late this year when we're feeling a bit more secure about the pandemic, but still a little bit nervous about the future. And that when we haven't got into the new year, where it might be more evident that the vaccine rollout hasn't gone as the government had hoped. So we could see an opportunity for him late this year that maximises his chances of being returned.

RUBY:

Karen, thank you so much for your time.

KAREN:

Thanks, Ruby.

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[Theme Music Starts]

RUBY:

Also in the news...

Israeli airstrikes have killed killed at least 24 Palestinians including 9 children in Gaza, according to Palestinian health officials.

The escalating violence has also left at least 6 Israeli’s injured after a residential building was struck by rocket fire from Gaza.

Israel’s Prime Minister Benjamin Netanyahu warned the “current conflict could continue for some time”.

The current tension was partly sparked by the planned forced eviction of a number of Palestinian families from the neighbourhood of Sheikh Jarrah in East Jerusalem.

And Victorian health authorities have confirmed a new local case of Covid-19 in Melbourne.

The positive case completed hotel quarantine in Adelaide before flying to Melbourne, but it’s believed he only became infectious after landing in Victoria.

I’m Ruby Jones, this is 7am, see you tomorrow.

[Theme Music Ends]

Federal Treasurer Josh Frydenberg has handed down what is expected to be the government’s last budget before the next federal election. Today, chief political correspondent for The Saturday Paper Karen Middleton on what’s in the budget, and what it says about the government’s political priorities.

Guest: Chief political correspondent for The Saturday Paper Karen Middleton.

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7am is a daily show from The Monthly and The Saturday Paper. It’s produced by Ruby Schwartz, Elle Marsh, Atticus Bastow, Michelle Macklem, and Cinnamon Nippard.

Brian Campeau mixes the show. Our editor is Osman Faruqi. Erik Jensen is our editor-in-chief. Our theme music is by Ned Beckley and Josh Hogan of Envelope Audio.

New episodes of 7am are released every weekday morning. Follow in your favourite podcast app, to make sure you don’t miss out.


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456: Josh Frydenberg's big-spending budget