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RUBY:

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

A Labor government has handed down a budget for the first time in nine years.

It isn’t the budget that many might have imagined in May when the party won the election, and it lands as global economic conditions continue to deteriorate.

Last night, we got the pitch that tells us how this Labor government thinks it can contend with that challenge and what it plans to deliver for Australians.

So what’s in it? Who does it benefit and who is missing out?

Today - chief political correspondent at The Saturday Paper Karen Middleton on what’s inside the Albanese Government’s budget.

It’s Wednesday, October 26.

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Archival tape -- Jim Chalmers:

“Speaker, from the Ngunnawal and Ngambri lands of Canberra to the Yarra, and Yuggera and Ngaraghwal lands of Logan and right around Australia we acknowledge country and we commit to a voice for first nations people. Speaker, this is a responsible budget that is right for the times and readies us for the future.”

RUBY:

Karen, you're in Parliament right now where Labor has just handed down its first budget, but it hasn't been that long since the previous one, the budget that was delivered by the then Treasurer Josh Frydenberg back in March. So to begin with, why is it that we are getting another budget now just seven months on and I suppose more importantly, how different is this budget from the Coalition's version?

KAREN:

Well, it's pretty different and the reason we're having another budget is partly because of the global circumstances, the war in Ukraine and the other global pressures. Other countries heading into recession, the uncertainties around the world, and partly the uncertainties in our own economy from flooding and pressures on the domestic economy generally.

We have a new government that has different priorities, but also the last government's budget hasn't got all the way through the parliament. So there's a number of measures in that last budget that are not. They may be signed and sealed, but they weren't delivered. And so there's an opportunity for the new government to claw back some of that money that was handed out in a pre-election spree.

So for all these reasons, they decided to have a budget just a few months after the last one. So where we're at is this is a kind of an in-between budget. It gives the government, the new government, the chance to sort of talk about what it wants to focus on to change the story, if you like, about the budget and to emphasise the economic circumstances are very difficult and that they're sort of warming people up to the idea that things are going to be tough for a little while.

Archival tape -- Jim Chalmers:

“This budget makes hard decisions for hard times. New policies have been largely offset across this year and next to avoid adding to inflation when price pressures are most acute.”

KAREN:

This Government is really, as I say, trying to change the story of the budget and suggest that the budget is about building for the longer term rather than just short term relief. Now, what they're also trying to do is build trust from the community in the government. I think trust has been eroded in governments in recent years, and this government is wanting to demonstrate that it's a responsible economic manager and that it's being straight with people about the situation that we're facing in economic terms.

RUBY:

Yeah, it sounds like what's happening here is an attempt to reframe the budget away from the idea of one-off grants or handouts into this document that really lays out long-term investments. So as it does that, what kind of language is the government using? What is the message that they're trying to send?

Archival tape -- Jim Chalmers:

“Australians know that this is a time of great challenge and change. The global economy teeters again on the edge with a war that isn't ending, a global energy crisis that is escalating, inflationary pressures persisting and economies slowing, some of them already in reverse.”

KAREN:

Well, there are a couple of words the Treasurer's been using a lot and the first one is restraint. His news conference in the Budget lockup was focussed very much on that word. We are demonstrating restraint. We are not handing out money in direct assistance to people, cost of living assistance and the like. We are being judicious, he said about where the money goes. We are being responsible. So they are trying to portray themselves as responsible economic managers that are investing in the future and in the longer term, and not just a sugar hit of immediate relief.

Now how well that goes over with people is another question as we head into what is some pretty difficult economic times. If you look at the forecasts in the budget, things like wages will not outstrip inflation for another couple of years, yet inflation is going to peak later this year, up above 7% before it starts to come down again. And it will be a couple of years at least, if not more than that, before it's getting closer to the ideal range that the Reserve Bank would like to see it in.

Archival tape -- Jim Chalmers:

“Wages are growing faster now than they were before the election, but that welcome news is tempered. Rising electricity prices and grocery bills eating into pay packets.”

KAREN:

And there's a really dire warning about electricity prices in this budget. The Treasury is assuming that electricity prices will go up by 20% this year and then another 30% next year. So this is really the Government saying you need to trust us, we're trying to build trust with the community and you have to believe that we're doing all of this to stabilise the economy and to look after people. But there'll be some people who'll be wondering why they aren't getting any direct handouts now.

RUBY:

Hmm. Well, let's go into some of the specifics of what's actually being funded. Can you tell me more about what it is that this government wants to spend money on where it's actually going?

KAREN:

Well, they focussed very much on the things they promised before the election. Things like expanded access to childcare, making childcare easier to get, and cheaper.

Archival tape -- Jim Chalmers:

“Cheaper childcare is a game changing investment in families in our workforce and in our economy. It will increase the paid hours worked by women with young children by up to 1.4 million hours a week in the first year alone. That's the equivalent of 37,000 extra full time workers.”

KAREN:

Paid parental leave. Similarly, being able to split the leave allowance between two partners so that that caring can be shared and it enables both people to maintain their working lives.

Archival tape -- Jim Chalmers:

“Tonight, our Labor Government delivers the biggest expansion of paid parental leave since its creation. This budget invests more than $530 million to progressively scale up the scheme, reaching six months paid leave in 2026.”

KAREN:

And then there's an awful lot in this budget about climate change. They've clawed back some money that had been allocated to projects within the Environment Department under the previous government and redirected it. And the interesting thing, I think, is that climate change is really very present throughout this entire budget.

Archival tape -- Jim Chalmers:

“Australia now has a government that understands the generational and economic imperative of acting on climate change and a plan that provides stability to the energy grid and stability to investors…”

KAREN:

And there's a lot of money for health. There's more money for COVID response ongoing. A lot of the priorities that you would expect from a Labor government very heavy on first nations, the money to implement The Voice referendum, to work on violence in First Nations communities and violence against women in particular more broadly in the Australian community.

So it is very much a Labor budget with Labor priorities. But the Government is trying to emphasise the sort of human face, I guess, of the budget.

RUBY:

We'll be back after this.

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RUBY:

Karen, can we talk a little bit more about the way that climate change is referenced in this budget, the way that it's been woven through a lot of different portfolios, instead of just being focussed in on the energy or the environment portfolio. Can you tell me a bit more about that? And, and does it strike you as an interesting way to approach that challenge?

Archival tape -- Jim Chalmers:

“Our plan drives investment in renewable energy, which is cheaper energy, and delivers thousands of new jobs in the coming years, many of them in our regions.”

KAREN:

It's telling us, I guess, that the Government's very, very focussed on addressing climate change and we've seen, as we know, that has been an issue in the past decade or so. That's been a terrible blot on Australia really being unable to move in the direction of climate action. And this Government is moving very fast, relatively speaking. So they've not only reconfigured the public service to emphasise a climate change department, climate change in an environment, but they are really doing energy policy, thinking about every policy area through the prism of climate change.

So we're seeing they're rewiring the nation plan being funded in this budget, which is about emphasising getting away from fossil fuel driven energy to renewable energy sources. We've seen things like setting up a unit within the Health Department to look at the health implications of climate change, setting up units in the Prime Minister's department to look at the progress to net zero emissions and the impact on the economy and making sure that that transition is workable. So it's really a matter, I guess, of waving, as you say, the climate action policy measures this government is now focussed on right the way across all areas of government and the economy and really embedding it in the budget.

RUBY:

Hmm. And can we talk a little bit more about housing? Because this was something that we heard about before the budget was even handed down this plan to build a million homes by 2029. So after looking through the budget papers and seeing what their housing policy is in a bit more detail, can you tell me about how it is that that actually would work?

Archival tape -- Jim Chalmers:

“I am proud to announce that we have just struck a new national housing accord between governments, investors and industry to build the affordable homes that our country desperately needs and to help tackle our housing crisis.”

KAREN:

Within this accord, it's an agreement over five years to build 1 million homes in locations that are close to employment so that people don't have a long commute. And that will help bring costs down for people.

Archival tape -- Jim Chalmers:

“Rents are through the roof and many families are struggling to keep up. Supply hasn't kept up with demand, which means too many struggle to live close to where they work. Too many are stuck on waiting lists for social housing. And for too many, the great Australian dream of home ownership seems completely out of reach. Our country can do better than that and our government will.”

KAREN:

And within that, there are at least 30,000 of those homes that are deemed affordable and or social housing. And that is going to be partly funded through the Commonwealth, 10,000 affordable homes through the Commonwealth Government, up to another 10,000 through state and territory governments funding them.

And they've also arranged financing arrangements through superannuation funds, because super funds are always looking for investments that are profitable. And so they've negotiated with super funds to try and underwrite these housing projects and see that as a viable investment for super.

RUBY:

And Karen, are there any policy areas that have been a bit neglected in this budget, areas that Labor might have talked up in the past as priorities, but perhaps haven't gotten to yet as far as major funding overhauls?

KAREN:

Well, I don't know about policy areas that are neglected, but I think that some people who are really feeling the pinch in terms of rising cost of everything may feel that the government is neglecting them in terms of direct payments, and direct supports. They will be very used to government in recent years giving them handouts, direct subsidies, cash handouts in some cases. And that's not only not in this budget, but the government is giving the message very clearly that's not going to be the way that they operate. If anything, it's going to get tougher before it gets easier.

Archival tape -- Jim Chalmers:

“Australians know that there are hard days to come and hard decisions to accompany them. In getting through this period stronger than we were before will rely on the very best aspects of our national character.”

KAREN:

The Government is talking about having to restructure the tax system, the Treasurer Jim Chalmers, is looking at things like the National Disability Insurance Scheme and pointing out what they call a structural deficit in the economy. In other words, things like the NDIS, the defence forces, the health system, the aged care system are costing us more than we earn. We don't have the money to pay for it.

So they're either going to have to make cuts to those programmes that have an ongoing cost or they're going to have to find ways to raise more money to pay for them. And that could mean tax rises.

Archival tape -- Jim Chalmers:

“Now this is just the beginning of our budget repair work and it's just the beginning of the conversation that we need to have as a country about our economic and fiscal challenges and about the choices that we need to make on what is affordable and what is fair.”

RUBY:

Hmm. Yeah, it sounds like this budget is taking a fairly broad approach, trying to invest in things like the environment and in housing without spending too much given the debt situation and the state of the global economy. So stepping back and thinking about that in the context of this government, which is still a fairly new government, does this budget give you a deeper understanding of the kind of country that Labor wants to shape?

KAREN:

Yeah, I think this is a Labor budget, and I think this government is talking about the longer term and talking about the future. You know, the theme of the budget overview document that they gave out was Building a Better Future, and that's what they're talking about. They're talking about investing in the nation in a more substantial way so that there's something to show for it at the end of their endeavours, whether that be one term in government or longer than that. The Prime Minister, Anthony Albanese, has talked about having a two term strategy. During the last election campaign. So they've already said they're thinking long-term.

So I think in that quest to get people to think more long-term, along with the government, this budget is part of a process. They didn't want to shock people by suddenly making dramatic moves that people didn't understand or didn't understand the reason for. So this in-between kind of budget is changing the story, is explaining to people that they want people to understand the state of the economy, and then asking people to go with them on a journey of being more responsible. Now it's going to be an uncomfortable journey, and we'll see how well they manage to persuade people that it's a journey that they want to take.

Archival tape -- Jim Chalmers:

“A future we can all have a stake in, all sharing in its success. A stronger, more resilient Australia with more opportunities for more people in more parts of our amazing country. I commend the budget and the bill to the House.”

RUBY:

Karen, thank you so much for your time. It's been great speaking to you.

KAREN:

Thanks, Ruby.

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RUBY:

Also in the news today…

The jury in the trial of Bruce Lehrmann for the alleged rape of Brittany Higgins have told the judge presiding over the case that they cannot come to a verdict.

The judge has responded by telling the 12-person jury to go back into deliberations, in the hope of reaching a verdict. In the ACT juries are required to reach an unanimous decision.

And South Korean and North Korean armed forces have exchanged warning fire near their maritime border.

South Korean military officials said a North Korean merchant vessel crossed into what have traditionally been South Korean waters, but retreated after the South’s navy fired warning shots.

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

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