ASHLYNNE:

There are certain traditions and rhythms around the federal budget. There’s a particular tree at Parliament House that always turns red, Aussie’s coffee shop inside the building heaves with lobbyists and anyone with even the most remote reason to be in Canberra, and shows not usually interested in politics, well, they give it a crack.

Audio Excerpt - Josiah Shala (Radio Host):

“Prime Minister, that debt isn't necessarily real, it's a number. And that I think most governments, not just the Australian government, governments around the world, they know that the world's going to be ending at some point in the future. So you guys are just going to continue spending because who cares, the debt won't exist when the world's done anyway.”

Audio Excerpt - Anthony Albanese:

“Well, we are not planning for the end of the world. What we are doing is trying to make a better future rather than no future, which is what the end of the world would represent, but thank you for the contribution.”

[Theme Music Starts]

ASHLYNNE:

From Schwartz Media and 7am, I'm Ashlynne McGhee. This is The Cost: Inside the living crisis.

It’s now we’re starting to get a real sense of how the budget’s landing.

So has the Treasurer spent enough to help people out? And will they even remember it when it comes time to vote?

Today, contributor to The Saturday Paper Paul Bongiorno, on where the battle lines are being drawn.

It’s Thursday, May 16.

[Theme Music Ends]

ASHLYNNE:

So Paul, this budget is only 36 hours old, but we know we're going to be talking about this one a lot as we head towards the next election and as we try to get out of this cost of living crisis. So what are the early criticisms that we've heard of the budget?

PAUL:

Well, it was Shadow Treasurer Angus Taylor's job to be the first coalition voice to hit the airwaves just an hour or so after the budget was delivered and, from the coalition's point of view, there's a lot hanging on Taylor's performance.

Audio Excerpt - Sarah Ferguson:

“Angus Taylor, welcome to the program.”

Audio Excerpt - Angus Taylor:

“Good to be with you.”

Audio Excerpt - Sarah Ferguson:

“We just heard a discussion…”

PAUL:

Well, on the ABC's 7:30 program with Sarah Ferguson after the budget was delivered, he attempted to skewer the government by saying it had spent too much, and that spending would make inflation worse.

Audio Excerpt - Angus Taylor:

“If you plan to spend a lot of money, it's inflationary. We've got a 16% increase in spending over two years, and the economy's only growing at closer to 7%. So that's spending growing at double the pace of the economy, and that takes us…”

PAUL:

But the problem for Taylor is earlier in the day, before the budget was delivered, he'd been out there saying the government wasn't spending enough to support households. This left him in a pretty uncomfortable position when asked whether the opposition would support the government's support for households.

Audio Excerpt - Sarah Ferguson:

“Do you support the government's billions of dollars in subsidies to those struggling Australians? Do you support that?”

Audio Excerpt - Angus Taylor:

“Well, what's clear in this budget is they're not going to the source of the problem. They're putting a bandaid on a bullet wound.”

Audio Excerpt - Sarah Ferguson:

“Let me just stay with that particular question, do you support those cost of living?...”

Audio Excerpt - Angus Taylor:

“(Interrupting) This is the.. the… the, the context is incredibly important. And I will answer that question but the context is important.”

PAUL:

Well, ultimately, he said the budget was a Band-Aid on a bullet wound. But with the election looming, he didn't make the same mistake the opposition made with the first energy bills relief package. You might remember they voted against it. Well, this time, with an election looming within 12 months at the latest, they'll be voting for it.

Audio Excerpt - Angus Taylor:

“So we will support that, but not because we think that's ultimately the right answer. Labor has failed to deliver the energy price reductions they promised.”

PAUL:

And so the Coalition itself hasn't pulled together a coherent story to really help its shadow treasurer to get onto the front foot. It sort of leaves him with nothing much more than strident criticism.

So, on Wednesday morning, Peter Dutton had a go and we got his first reaction.

Audio Excerpt - Sabra Lane:

“Peter Dutton, thanks for joining AM.”

Audio Excerpt - Peter Dutton:

“Pleasure, Sabra. Thank you.”

Audio Excerpt - Sabra Lane:

“Every household, rich and poor, will get $300...”

PAUL:

He confirmed the opposition would vote for the government's student debt relief, and energy bill relief, and rent relief.

Audio Excerpt - Sabra Lane:

“So are you going to support it or not?”

Audio Excerpt - Peter Dutton:

“Well, we'll support measures which provide relief and, obviously, this comes in this budget before the election in any case. But we do know that families, under this budget, a typical Australian household with a mortgage is more than $35,000 worse off.”

PAUL:

Dutton picked up on the concerns of many in the commentariat, you know, economists and the like, that the budget risks fuelling inflation and despite the Treasurer's confidence it won't. But Dutton may well be right that Australians may have to wait longer for an interest rate cut, or inflation may well rebound sometime in the future.

Audio Excerpt - Peter Dutton:

“What they sneakily tried to do is get an interest rate reduction before the election, but then rates will jump back up after. So, I think this is a smoke and mirrors game going on here and giving $300 to people who were promised much more than that by way of reduction of their power prices, it's just not going to cut it for the average family.”

PAUL:

This makes tonight's budget reply speech all the more interesting. Surely the pressure is now on Dutton to come up with some serious and costed alternative policies.

ASHLYNNE:

Right, so do we have any sense of what the opposition's alternative would be here? Like, what hints do we have about what they'd be doing with the budget right now?

PAUL:

Well, there have been hints in the last few days that they could promise even greater tax cuts. Angus Taylor and Senator Jane Hume, the shadow finance minister, have made hints in the media that this is the direction they intend to go in. Treasurer Jim Chalmers has responded to those hints by putting the pressure on the opposition to announce something concrete. Earlier this week, he said, they're all over the shop when it comes to these tax cuts. Chalmers said if the opposition is going to give bigger tax cuts to people with high incomes, then they needed to put a plan for how they intend to pay for it and tell the Australian people tonight. Tuesday night's figures show that while the government has found a surplus now and can make a dent in paying down debt, still by 2025-2026 according to the budget papers, Australia will hit $1 trillion of gross debt. And that's simply because the cost of programs we already have like health, aged care and the NDIS as well as defence, are set to grow over time along with interest on our existing debt, and the revenue isn't growing at the same rate. That's what we mean when we talk about structural deficits. But, Ashlynne, some of the harshest criticisms of the budget came not from the opposition, but from the minor parties and the crossbench.

ASHLYNNE:

Right, Paul, so we know the crossbench has been pretty vocal and pretty influential as well during this parliament. But have they been able to put forward a serious critique of this budget that, kind of, gives us an indication of how they'll fight the next election?

PAUL:

Well, the loudest voice has certainly been Jacqui Lambie.

Audio Excerpt - Jacqui Lambie:

“We're obviously getting a $300, not means tested? What are we, back on COVID days? Where we’re just chucking money left, right and centre.”

PAUL:

She slammed the $300 energy rebate for all households, saying that the government should have means tested it to spend more money on people struggling.

Audio Excerpt - Jacqui Lambie:

“Seriously, you're too lazy to do some means testing. We don't need $300, I can assure you, and that should have been passed forward.”

PAUL:

Senator David Pocock actually put an alternative on the table, arguing that if the government invested in electrifying households, instead of a one off $300 rebate going to each home, they would have made energy bills cheaper for Australians permanently.

Audio Excerpt - David Pocock:

“The other bit I think that is missing from the future made in Australia is household electrification. It is such a huge...”

PAUL:

He said the government needed to show, we could be much smarter as a country. And it would have set up households to save thousands every year.

Audio Excerpt - David Pocock:

“When we look at 300 bucks to every household in Australia, I think we would be much smarter as a country investing in household electrification where households can be saving $2000-$5000 every year going forward. We know that it's anti-inflationary, because you're locking in the price of electricity.”

PAUL:

And when it comes to the other major minor party, if I can put it that way, the Greens, they made it clear in their reaction that they do intend to fight this election on housing and rentals. With leader Adam Bandt putting the issue at the heart of his early response to the budget.

Audio Excerpt - Adam Bandt:

Labor's Band-Aid Budget is a betrayal of people who are doing it tough. It's a betrayal of renters, of mortgage holders, of women, of students.

PAUL:

He linked this to inflation saying rent is a massive driver of inflation, and the housing crisis is breaking people.

Audio Excerpt - Adam Bandt:

“Labor's tightening your belts while letting big corporations and billionaires run wild. There's a lot more that could have been done to tackle this crisis.”

PAUL:

But Ashlynne, we have to take into account that we're in the last year of the electoral cycle, and we have to run a filter over much of this criticism. Chalmers, as the treasurer in government, has to keep a broad swathe of the electorate and demands on him as onside as possible. And there is confidence in the government that the treasurer has positioned Labor well on that score.

ASHLYNNE:

Coming up after the break, my deficit is smaller than your deficit. What a very Canberra argument.

[Advertisement]

ASHLYNNE:

Paul, this cost of living crisis has gone on for longer than pretty much anyone predicted, and inflation remains high, voters are crying out for help. Do you think the treasurer has promised people enough or, will he face that criticism that he could really have been a bit more generous?

PAUL:

Well, there's no doubt millions of voters are frustrated with their struggle to make ends meet. The remarkable thing is Chalmers, in this budget, has delivered a surplus and meaningful relief on energy costs, rent relief and health, especially through the freeze on prescriptions through the PBS. And while we have forecast deficits, it frustrates the treasurer that critics don't compare these forecasts with those of the last coalition budget, which is still within the budget cycle. He said, on radio on Wednesday morning, that next year's deficit, predicted to be $28 billion, is $19 billion less than Josh Frydenberg was forecasting for the same year in his last budget. And the other point to make is the tax cuts and the rebates, the rent relief, the student loan repayment relief, all these measures kick-in in just two months time. The tax cuts will actually start turning up in people's pay packets and the electricity bill relief, along with the rent relief, will be noticed, helped by the fact the government has allocated $40 million in multi-platform advertising, just to remind everyone. And Ashlynne, there is another factor to take into account. Treasury has been ultra conservative in predicting where commodity prices will be. Iron ore, down from $110 a tonne we're actually getting, predicted to go down to $60. Now, I can tell you the budget will be looking a lot healthier if that proves to be way off the mark on the downside.

ASHLYNNE:

And so, looking ahead towards the election that we all know is coming in the next year or so Paul, what does this budget tell us, do you think, about where Labor believes they can win and the kind of voters that they’re keen to win over?

PAUL:

So when you look at where the government has landed with slowing inflation, you know it's half what Chalmers inherited just two years ago. And we've got rising wages, especially for the care sector and every household in the country, and every taxpayer getting something. The challenge for the opposition is to say what, of any of this, they would not do. Sure, they can talk about the risk of inflation and interest rate rises, but it's the Reserve Bank's view that will be critical here. But we do have to remember the economy is weakening. The numbers actually have it closer to a basket case. So the next movement in interest rates will be down. It's just a matter of when.

ASHLYNNE:

So, many have said that this budget is pretty much the, you know, the starting gun for the next election campaign but, of course, we still don't know when that will be. Did last night give you any clues about when exactly the government might call it on?

PAUL:

Well, in the budget lockup press conference, the treasurer said he was working to the economic cycle and not the political cycle. He said he was doing what the circumstances, domestically and internationally, were demanding.

But I have to say, this budget looks and smells like a pre-election exercise. But on that, it's over to the Prime Minister and when he judges is the most opportune time for him to pull the trigger and win the race.

ASHLYNNE:

Paul, always good to speak to you. Thanks so much for your time.

PAUL:

Thank you Ashlynne. Bye.

ASHLYNNE:

Tomorrow on The Cost, I'll be sitting down with Treasurer Jim Chalmers to ask whether this budget is good for young people, and when he thinks the cost of living crisis will finally be over.

[Advertisement]

[Theme Music Starts]

Also in the news today...

Donald Trump’s ex-lawyer Michael Cohen has testified in a Manhattan court that he did submit phoney invoices to cover up a hush money payment to adult film actor Stormy Daniels on Trump’s behalf.

Cohen claimed his duties included threatening to sue people and planting positive stories about the Republican candidate in the press.

And,

Officials have hit pause on the public art project called The Portal, that connects people in New York and Dublin via a continuous real-time video link.

The portal had become a magnet for controversial behaviour, including a woman in New York flashing her breasts, and some Dubliners holding up swastikas and displaying images of New York's Twin Towers burning.

That’s all from us for today. Thanks for your company, we’ll see you again tomorrow.

[Theme Music Ends]