The Inside Word

Federal Budget guide to the future

The lead up to any federal budget is filled with anticipation and hope that some sort of economic miracle will be revealed. Taxes down … cash rebates up … spending in every portfolio … all while magically reducing debt and driving down inflation. 

The media, commentators and the political class perpetuate the ‘miracle budget’ myth, but expectation and reality can be vastly different. The Federal Budget used to be all about debt and deficit, whereas today’s budgets are complicated beasts.

Kudos to the Treasurer for dealing with the current complexity and for his most recent Federal Budget, which delivered broader tax cuts rather than focusing on higher income earners. The tax cuts were generally well received, as will be the minor cost-of-living relief arriving via energy bill subsidies for every household. 

Beyond the elections, the Budget is the most important event on the political calendar. 

It’s an opportunity for government and opposition to articulate a vision for the future within a financial framework in which the ‘person on the street’ usually has a very strong view. It can’t make a government but can certainly destroy one.

The Albanese Government was clearly focused on cost-of-living relief and acknowledging that many households are struggling with mortgages, rent, groceries, fuel, energy bills and everyday living costs. 

Nothing comes cheap these days. This isn’t to say the onus is on those providing goods and services, especially when they themselves are struggling with the cost of supplies, people and energy bills. While the economy is strong, it seems no one is winning except the high end of town.

Beyond the household and family issues that dominated budget headlines, the complex matters of climate change, energy, housing availability, mortgage and rent affordability, defence and national security become the task for the future.  

The government focused on transitionary pathways for the highly complex renewable energy arena and the ‘Future Made in Australia’ policy. Their long absence from the Australian policy framework means any rectification now will lag by decades. However, it’s better to start now than wait longer and be forced to take drastic measures as our quick-fix options evaporate.

Meanwhile, the Coalition has staked its electoral fortunes on nuclear energy. I’m taking a neutral position as Australia is further from a nuclear future than it is from the sun on a bright day. There are so many issues with nuclear and, if it’s ever publicly accepted, it will be sensibly debated by our next generation. Let’s see if the few early adopters can make it work affordably and efficiently. 

CSIRO’s latest report clearly states nuclear is too costly, too long to market, and that Australia has no expertise or proven track record. We shouldn’t oppose the concept of nuclear power or refuse debate on the issue, but it should stand on its merits and compete commercially with every source of energy generation. 

Debate is necessary, but finding sensible voices will prove very difficult as everyone is taking sides early. It’s clear the Coalition wants to differentiate itself on energy and climate but won’t risk a direct policy intervention as an election-winning strategy. The people in LNP electorates will end their enthusiasm for nuclear energy the moment a site or waste facility is identified in their back yard.

Meanwhile, advances and opportunities in pumped hydro, renewable bio-methane gas, solar, batteries and natural gas are part of the transition. We need something at scale and baseload to replace the geriatric coal-fired power plants that are at risk of catastrophic failure within a few years. Safety, not political decisions, will shut down coal power in Australia.

For this term of government, it’s hard to go past cost-of-living, economic management and stable government to provide the best chance of re-election. Arguing for nuclear power provides little advantage beyond differentiation. There won’t be a federal election this year, but the window next year will tighten quickly with federal Labor needing to put some policy losses behind it and focus on giving people and households the confidence to re-elect it.

Some will disagree with this sentiment. I’m sure the Greens, One Nation and independents will have different views and perhaps, for the first time, be a real and equal threat to government and opposition.

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