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Budget Futures in a Time of Global Economic Nationalism

By Denis Bright

Jim Chalmer’s Budget received a good reception. Commentators identified with the government’s cost-of-living commitments but wanted more targeting of this assistance to cope with the growing income and social divides across Australia.

In this context, the LNP’s calls for spending restraint have little support in the wider community. LNP supporters should decide which cost-of-living initiatives should be given the chop.

Progressive crossbench leaders might work with the government on fine-tuning the budget initiatives without hampering a commitment to anti-inflationary measures.

 

 

As the Senate under Section 53 lacks constitutional power to amendment budget and money bills, legislative changes must come from the lower house on these issues. Here the Albanese government has the numbers to maintain the existing budget parameters. Government members in the lower house would be sympathetic towards more relief for jobseekers. Negotiations over some tinkering with minor budget parameters can still be achieved with the co-operation of progressive crossbench members in the House of Representatives.

The rental assistance measures offered do not go far enough to address the income divide with extra battalions of 80,000 unemployed people in the next twelve months as unemployment rises to 4.5 per cent of the workforce. The political world would not collapse if support for job seekers came in the form of training programmes and targeted relief for job-seeker allowances. Budget deficits will return in 2024-25 the attainment of twin surpluses. Adding a couple of billion in targeted spending initiatives for the retraining of unemployed Australians will not challenge the overall budget parameters and could be offset by better targeting of cost-of-living relief measures. Complaining about those red signals of the Underlying Cash Balance Graphs since 1990 is a bit far-fetched when they also occurred under the federal LNP during the post-2013 era.

 

 

Revenue might come from targeting cost-of-living support without the need for longer term measures like a sugar tax on beverages which contribute to diabetes.

These budgetary negatives have been balanced by an extraordinary commitment to home care packages for elderly patients and relief for the cost of PBS scripts. The effects of more commitment to mental health and relief for job seekers need not add to inflationary pressures if balanced by revenue initiatives. All this assistance to ageing baby-boomers has not translated to a firmer primary vote for Labor in previous elections.

Nine News Graphics shows the extent of commitment to health and welfare in the current budget. More commitment to the productivity levels of spending on infrastructure as well as grants to the states and territories could be of a higher profile in media releases from the Albanese Government.

Expenditure on rearmament and AUKUS will of course show up in future budgets. This spending has been contained at just less than $50 billion in the current budget.

 

 

While external factors on the current budget targets from global economic trends are currently favourable, the current budget parameters retain a high degree of flexibility. ABC’s financial analyst Alan Kohler has a positive assessment of this situation which may not extend into 2025.

 

 

Higher interest rate regimes in both Britain and the US do not assist Australia in its own fight against inflationary pressures. Any breakthroughs in Chinese investment and trade with Australia during the visit of Chinese Premier Li Qiang in June 2024 might improve our economic flexibility. Meanwhile, the Biden Administration has moved into economic nationalist mode to enhance its re-election prospects This is hardly a sign of confidence from the economy which generates financial and strategic leadership worldwide (Yahoo Finance 14 May 2024):

US Re-Election Strategies Triumph Over More Logical Global Economics:

 

 

Goodwill towards tinkering with the budget estimates from progressive sections of the crossbench rekindles the progressive alliances which assisted in the election of the Albanese Government in 2022.

After a GDP growth of just 1.75 per cent in 2023-24, these positive external factors can offer temporary optimism in the forthcoming election season and marginalize the rearguard campaign from Peter Dutton against all things progressive. The global economy has moved on to a new era that is fueled by economic nationalism and canny economic diplomacy.

Treasurer Jim Chalmers can interact productively with the new world order and a little progressive tinkering from the crossbench to his budget estimates. That is why Treasury is ahead of the RBA in its economic assessments about the possibility of an early reduction in interest rates while both the US and Britain cling to high interest rate regimes to maintain the value of their currencies and to maintain capital flows. It is the RBA which must respond critically to the prospects emanating from Treasury and broader trends in the Australian and global economies.

Jim Chalmers would know that Australia can afford to be less dependent on our global strategic leaders to reclaim a more respectable degree of national sovereignty.

 

Denis Bright (pictured) is a financial member of the Media, Entertainment and Arts Alliance (MEAA). Denis is committed to consensus-building in these difficult times. Your feedback from readers advances the cause of citizens’ journalism. Full names are not required when making comments. However, a valid email must be submitted if you decide to hit the Replies Button.

 

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15 comments

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  1. wam

    Yes,
    Dennis,
    There is no doubt, Labor is doing a fair job and not worthy of LNP nor Loonie attacks.
    Hope the RBA is listening?

  2. Phil Pryor

    Biden may feel cornered by USA media turbulence, ignorance, selfishness, social stupidity, domineering attitude, pustular pomposity, etc., but, the announcement of huge tariffs on welcome Chinese initiatives in vehicles is just awful, ignorant, uncivilised, brutal, self defeating, puerile and vandalism let loose. The USA is a world leader in constipated political negativity.

  3. paul walter

    A very, very interesting read.

    Always ok for a listen to the likes of Pascoe, Kohler etc.

    Also, an interesting comment from Phil Pryor.

  4. Bert

    Interestingly the shadow treasurer would like to wind the clock back to when Peter Costello was treasurer.
    Tomorrow we will hear from out favourite opposition leader as he gives some clues (or maybe just obsfucations) to what the LNP would prefer if they were still in the hot seat.

    Mmmmmm. I wait with bated breath.

  5. Clakka

    Thanks Denis.

    I’ve listened to all the howls and expected political blackmails. It’s a bit telling that the most strident ones don’t have cogent plans by which their howls can be rendered to purrs of contentment.

    There are certainly diabolical external pressures on the way our govt can ‘responsibly’ move forward with the increase in world-wide protectionism and nativist leanings. The most agonizing of which is the prospect of a Trump presidency, the imminent collapse of Putin’s Russia, the extension of Modi’s regime, and the provocations on China.

    The LNP have a snowball’s chance in hell of dealing with the associated complexities, but the sucked-in corporatized droog elements of our citizenry prompted by our festering mainstream media and its mindless dragooned ‘journalists’ could tip Labor out in a spray of bad breath on the day.

    In such circumstances, bending over with a “she’ll be right, mate”, “I’m alright, Jack” just won’t cut it. It’d be 1000 times worse than pissing into the wind. To attend to the net-zero, renewables and decarbonization necessity is mind-blowingly complex and expensive, and coupled with the other crises like homelessness and housing and ongoing attendance to climate catastrophe, health and education through a global labour shortage is a nightmare. Above and beyond anything else, we must remain financially viable and liquid if we are to have any chance of dealing.

    We cannot address these matters in Oz isolation, but as inextricably attached to global influences, we must remain attractive for foreign trade and investment. Just how, when and where that comes, is at present almost a lottery, but try we must.

    Structural reform is certainly needed, but up front bulldozing them now would be a disaster in many ways, not least, electorally. And where would that leave us?

    Although we are not (yet) in a world ballistics war, we are in a global economic/ecologic war of major proportions, and no less than in WWI and WWII there is plenty of suffering, and inevitable contraction, so shoulders to the wheel are required to affect recovery.

    On balance Labor probably has its formula right. That’s not to say there are huge risks ahead.

  6. Andrew Smith

    Interesting to view the graph on how ALP keeps in black vs. LNP keeps us in the red, ditto US Dem vs. GOP.

    Related, many complaints by media analysts on this related bias of not just the right are best economic managers, but adherence to suboptimal polls.

    The NYT editor Kahn justified using polls (not reporting) to obsess about Biden’s age, immigration and inflation (via suboptimal NYT/Siena polls that have Trump-Biden neck a neck, including with youth vs what better polls show), ignores all other polls that suggest immigration is way down the list.

    More RW political and media constructs and ‘wedges’ that are then obsessively promoted on a daily basis, but ignoring other issues……worse by Fox News etc.

  7. leefe

    … a good reception.

    From whom? $54bn for fossil fuel subsidies, not to mention the pile for those effing submarines, just for strters. When you consider what could be done with that money that would actually make life better for people …

  8. Michelle

    Jim Chalmers is never far from his Logan City home in his cost of living commitments.

  9. Leila

    Jim Chalmer’s electorate experiences the terrible consequences of years of LNP neglect: He can bring the perceptions of the voters in Rankin with him to world forums. I think he is a genuine representative. Unfortunately, Australia did not receive an invite to the G7 Summit in Bari this year. Boris Johnson invited Australia to Cornwall in 2019 to talk up the AUKUS deal with its support to British arms exporters.It is the Chair’s prerogative to decide who comes and goes at these events.even if Italy is a weak economy that is not much larger than our own with almost 8 per cent unemployed.

  10. Burleigh Waters

    I like the idea of negotiating with progressive parties to fine-tune the budget. If Labor wins seats on preferences to the extent it did in 2022, those other parties should be involved in frank negotiations with the local Labor federal member about budget priorities.

  11. JamesDeane@Senior High

    Our class and Economics teacher support the overall budget values but we are concerned about the rising unemployment levels which increased by 0.2 per cent this morning: That’s 30,000 more unemployed Australians out of work. Controlling inflation should not be at the expense of the unemployed while billions are offered in subsidies to mining companies for our national ego trip into great power status.

  12. Clakka

    ” …. while billions are offered in subsidies to mining companies for our national ego trip into great power status.”

    Might I suggest the above comment indicates a lack of proper analysis of the whys, wherefores and risks the govt must take account of in the rapidly pivoting global circumstances and the current labile nature of ‘First world’ politics / commerce. It’s far from ‘great power’ aspiration, it’s making contingency against collapse in the global economic war underway.

    I might add that there is nothing being done, that cannot be undone or modified – such is politics.

    In that regard I note that today “Labor and the Greens struck a grand bargain on fuel efficiency standards, offshore gas and the petroleum resource rent tax to pass all three bills in the Senate.” Adam Bandt said it had, “killed the gas fast track”.

  13. wam

    good one leefe there would be less than 15000 workers in fossil fuels.
    Imagine how many of those would be working in renewables, if the loonies hadn’t difched climate change in 2009.
    oops sorry, the bill didn’t suit senile Bobby.
    Go china give the septics curry???

  14. Ingrid

    Denis, Thanks for an interesting commentary on the 2024 federal budget.

  15. GL

    I see Der Spud’s reply was all the same old LNP bullshit: Crime, immigration, tax cuts, big cut backs to fund tax cuts, etc, etc…ad nauseam.

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