Who the budget will help, and who it won’t
Samantha Hawley: Hi, I’m Sam Hawley, coming to you from Gadigal Land. This is ABC News Daily. With 11 rate rises, soaring rents, grocery and power prices, it’s become really hard for a lot of Australians to make ends meet. So as the Government prepares to deliver a budget tomorrow, how and who is it going to help? Today, Radio National Breakfast and the Party Room podcast host Patricia Karvelas on what might be on offer and whether Labor will go after the big end of town. There’s a budget this week and it comes at a really difficult time for a lot of people. With interest rates rising rents are really high. Food and power is really expensive, you know, budgets are difficult at the best of times, but wow, this one is a little tricky for the Albanese government.
Patricia Karvelas: Yeah, I don’t envy the Treasurer and the Cabinet in constructing this one because you’re right. Household budgets are under incredible stress. People are desperate for help and yet we know that any extra spending or any extra help has has the dual threat of being essentially something that makes inflation worse. And so the government needs to provide assistance that isn’t inflationary, which is sort of a wicked problem to work out. But if they let down people who are struggling at the same time, the backlash will be enormous. So, you know better them than than us. We’ll stick to just analysing here.
Samantha Hawley: Exactly. So let’s in a moment talk about what the government is going to do to help Australians struggling financially at the moment. But first, let’s have a look at what the state of the budget is at the moment. What do we know about that?
Patricia Karvelas: What we know about the budget is that it’s in a structural deficit. So particularly some of these big items that keep growing our debt, keeping up with paying for the debt is our first and biggest growing item. The second is the NDIS. There’s health as well, which is huge. So all of these areas, the trajectory that they’re on is growth, growth, growth, growth. And in a structural sense the budget has some big problems. But just to completely confuse you, I’ll try my best, but just to completely confuse you, you might, on Tuesday night when the Treasurer, Jim Chalmers delivers the budget, you might, it’s not a guarantee, but even see maybe, embarrassed even to say it because it sounds ridiculous, a surplus just for this year. And then you’d think, Oh, we’ve got no problems. I mean, that’s good. That will be if it does happen, a one off from high iron ore prices, all the rivers of gold coming in, but you can’t price them in in a structural permanent way because they’re volatile.
Samantha Hawley: Yeah, right. So we’ve got this structural deficit that’s a situation where the nation’s finances are permanently locked into ongoing deficits. And the problem there is things like the NDIS, aged care, health care, they’re all blowing out. But the money we’re bringing in isn’t enough to pay for them anymore. That’s right.
Patricia Karvelas: Yeah. Yeah. So we need a reckoning in some sense, a big discussion about what needs to change. Now what we do know is that on some things the government thinks they need to slow growth of some areas. That’s one way. It’s not just about bringing in money. It’s also about perhaps slowing spending in some areas. So they’ve announced things like the National Disability Insurance Scheme, which which will cost an extra $8.8 billion a year, growing 12.1% annually. They want to cut that down I think now to 8% growth, which, you know, is perhaps reasonable. But the question then comes up, this is the wicked problem for the Government, okay, how are you going to do it? And that there’s no real answers yet. They are developing those answers, but they’re not here yet and they’re hard decisions. At the same time, aged care and health will be growing again. Hard decisions to make when there’s you know, what is quite obviously often described as a health crisis. At the same time, we don’t have a government that seems enthusiastic about jacking up taxes or getting rid of stage three tax cuts which are legislated to come in next year. Like these things that will actually keep putting pressure on the budget.
Samantha Hawley: Yeah. So as you say, big structural problems that this government needs to deal with. And there are all these Australians, as we spoke about at the beginning, who are suffering and they want and I think they’ll expect that they will be delivered some help on Tuesday night. So will the Government deliver assistance to those people?
Patricia Karvelas: The Government will have a pretty substantial cost of living suite of measures in this budget. They’ve made that clear and I know it to be true.
Treasurer Jim Chalmers: Cost of living delivered in the most responsible way, targeted towards the most vulnerable Australians in ways that doesn’t put upward pressure on inflation.
Patricia Karvelas: Now things we do know they will do, they will restore a higher level of payment for single parents.
Finance Minister Katy Gallagher: We want to make sure that this group of vulnerable Australians do get the support that they need to get.
Patricia Karvelas: Now the Howard Government and then finished off by the Gillard Government changed the system. So if you’re on the single parents payment that when you your youngest child turns eight, you have to go on the lower unemployment benefit.
Reporter: From next July, sole parents of school aged children who apply for support won’t get a pension, instead they’ll go on to the Newstart Allowance for jobseekers and they’ll be required to work a minimum 15 hours a week.
Patricia Karvelas: For families, that means losing about 100 bucks a week. For a low income family struggling to pay rent bills and raising kids. That is hard yakka. That’s a lot of money. That is really, really tough. So they’re going to increase that to 14 for the youngest child is my understanding. Then there’s the unemployment benefit too. Big calls for the unemployment benefit to increase.
Reporter: The federal government is facing growing pressure from its backbench to increase the rate of jobseeker unemployment payments in next month’s budget for Labor MPs.
Patricia Karvelas: Now will they go the full hog? That’s the big question. Well, I think it’s unlikely because it costs so much money, but they clearly are going to increase the payments for over 55s. I’ve been told there’ll be there will be things for younger welfare recipients. Okay. So there is a suite of measures that will be introduced on that night and the government will really try to sell the message that when it comes to the most vulnerable people who are really, you know, choosing between heating and eating, that those people will be helped. For those of us who, you know, are working on on decent incomes, you can’t expect huge amounts of support. And I think most people would think that’s reasonable. You know, it’s not the days of blank cheques coming to your mailbox after the global financial crisis because the economy is at a different stage and that can’t happen. I don’t think there’ll be sort of like a huge party going, Wow, they’ve really helped us all. I think they’ll still be quite a bit of grumpiness.
Samantha Hawley: Mm. Okay. So this budget will really focus on helping the people that need it most, as you say. But the question for me is, what about the big end of town? PK, is there going to be any changes there? Is the government a Labor government, going to do anything about what people are seeing as a growing inequality in this country?
Patricia Karvelas: Yeah, it’s a really good question and a difficult one for them because again, the promises they’ve made where, you know, no new taxes, all of these promises which really have stuck them in very limited territory on policy on this. So I think it’s going to be unlikely that they go for big hits, you know, huge changes to super. They they’ve already announced a modest change to super accounts that are over $3 million, which actually happens after the next election. So they’ve covered themselves politically. I’m sure you’ve previously talked about it on that. That’s modest. There’s no big ticket items. You know, the the sort of Bill Shorten 2019 stuff of dealing with negative gearing, capital gains tax, franking credits, all the the big things. I don’t think they’re going to go there and I think they want to keep faith with voters on the basis of trust. Remember, trust was eroded too in the past, you know, promising something and then doing something else. So trust is very important to the prime minister. He knows that Australians lost, have lost trust in institutions and he wants to restore it. He wants to be a fair dinkum kind of prime minister that people can trust. And so I think he will avoid it. I think they’ll be building a story though, in this budget that those sorts of changes are perhaps needed. I don’t know which ones, but some of some of those concepts and that they need a mandate at the next election. Now, there might be other things in this budget that we haven’t even anticipated. That’s the thing about budgets. There’s no rabbit out of the hat. We don’t have the money for for big things like that. But often the leaks before the budget don’t tell the whole story. So there’ll be, I think there’ll be perhaps some more unexpected things because people, you know, you’ve just had, what, the 11th interest rate rise. People are feeling frustrated and that frustration might start appearing in opinion polling. And they know that.
Samantha Hawley: Right. Yeah. So there’s always one eye on the politics and the next generation. Yes. And so what do you think? How has this government been balancing this rather delicate economic situation? Is it doing a good job, do you think, at this, or is it all getting a bit messy?
Patricia Karvelas: So last week, you know, in the lead up to the budget, there was this leak about, over 55s getting an increase in their unemployment benefit, which I understand was unauthorised. People go, what do you mean? Well, authorised ones where they want us to know and they want to go out and sell something. This leak, I understand it wasn’t authorised, certainly not by the Treasurer’s office. And then the sort of then the story became the rage of younger people for not getting this boost. Now, my understanding is that this this budget will be a little deeper than that. It’s not just only this payment for older people. There’ll be a package of help. But that that wasn’t helpful, right, in trying to help a group of people and that coming out, they managed to upset a whole cohort of other people that, back to politics, the Greens have been eyeing off as voters. And so everywhere they go there is a booby trap because they can’t satisfy everyone. So that’s the high expectations part of the story. On generally the story of managing the economy. If you look at it, they have actually gained a lot of ground when it comes to trust on economic management, and I think that’s actually quite a powerful thing for Labor. They know that’s that’s been often historically their weak point. And so I think people are giving them some credit on, you know, the sort of careful, methodical way they’re going about things. The risk, of course, for them is that in being slow and methodical, that people will also get frustrated. That hasn’t happened yet, but that’s the political ramification of taking that approach.
Samantha Hawley: Okay. As you say, we’ll leave it to them. It’s much easier to report on it than to actually do it.
Patricia Karvelas: That’s why we chose these jobs.
Samantha Hawley: Patricia Karvelas is the host of Radio National Breakfast and the Party Room podcast. Keep an eye on your feed. Tomorrow night as we’ll be bringing you a special episode of ABC News Daily from inside the budget lockup. This episode was produced by Flint, Duxfield, Veronica Apap, Chris Dengate and Sam Dunn, who also did the mix. Our supervising producer is Stephen Smiley. I’m Sam Hawley. Abc News Daily will be back again tomorrow.
