The government set itself a simple standard: not to make the Reserve Bank’s job harder. Michele Bullock may just choke on her cornflakes.
Already a subscriber?They call it a “budget” for a reason: it’s meant to constrain government decision-making. To force governments to make room for their spending priorities. To make tough choices between all the wonderful things they want to do., Treasurer Jim Chalmers appears to have been unburdened by such concerns. For my money, this is the most irresponsible budget in recent memory.
The cap on tax receipts to GDP? Gone. The cap on real growth in spending? Gone. The requirement that ministers pair cabinet submissions to spend new money with savings proposals for budget offsets? Gone.These are the constraints that are meant to ensure the prudent and responsible spending of taxpayers’ money, which is an objective that is more critical today – during an inflation crisis – than at any other point in recent decades.
Over the past two budgets, the government’s decisions increased the budget deficit in the coming 2024-25 financial year by $10 billion. Now, in this 2024-25 budget, the government has added another $10 billion to that tab. On their own, these tax cuts boost household cash flows by about the same amount as four interest rate reductions.
To be clear, there is nothing wrong with a government wanting to protect the most vulnerable in a cost-of-living crisis. Indeed, this is a reasonable and admirable goal.But a responsible government would either make room for these commitments by spending cuts or tax increase elsewhere – or be upfront about the consequences.
Jim Chalmers’ former boss, then-treasurer Wayne Swan, was responsible enough to impose on his colleagues a cap on real growth in spending of 2 per cent per year, achieved by a relentless search for savings and offsets to fund new spending.
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