Will the last economic rationalists in the room please turn off the lights? - The Centre for Independent Studies
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Will the last economic rationalists in the room please turn off the lights?

Although there will undoubtedly be some hangover from the last budget – the deficit will remain enormous – there are some signs that things will return to a degree of normality. To that end, we can make some confident predictions about how the next week will play out.

Prediction 1: ‘Responsibility’

The government will claim its budget is “responsible”. As they did in 2019 (“responsible budget management”), 2018 (“responsible savings”), 2017 (“responsible path back to a balanced budget”), 2016 (“responsible economic plan”), 2015 (“budget is responsible”) and 2014 (“responsible budget”).

Yet this government uses responsible in two contradictory ways. Sometimes the responsibility is to make difficult cuts to balance the budget, and at other times the responsibility is not to make cuts – despite the deficit – because that might upset the economy. It’s not clear which circumstances call for what type of “responsible” action.

My tip: this year’s “responsible” will mean not making any efforts at budget repair.

Prediction 2: ‘That’s not fair!’

The opposition will claim the budget is “unfair”. As it did in 2020 (“budget is not fair to all Australians”), 2019 (“neither fair nor responsible”), 2018 (“the Liberals desperately want you to believe this budget is fair. But …”), 2017 (“this budget fails the fairness test”), 2016 (“it’s not fair”), 2015 (“the same unfair, extreme ideology”) and 2014 (“losing our sense of fairness”).

Having discovered in 2014 just how strongly the rhetoric of unfairness cuts through as a budget response, Labor has been sure to repeat the same accusation at every opportunity. It may well argue that, according to Labor’s definition of fairness, every budget has in fact been unfair.

There is no question the government is to blame for not pushing back on the idea that the only fair approach is to tax more and spend more. Didn’t fairness once mean treating people the same, not forever tilting the scale in an endless chase for equality of outcome?

A government with belief in its convictions would argue that broad-based tax cuts are actually more fair than handouts to specific groups.

If fairness is to have any real meaning at all, it is hardly “fair” to level the same accusations of unfairness at the 2020 budget and the 2014 budget. But I doubt anyone thinks this will stop Labor from wheeling out the same old lines.

My tip: the biggest fairness issues in this budget will be not repealing the high-income tax cuts (that the Liberals took to the last election) and not promising even more money for childcare (even though it would go into exactly the same black hole as the last $2 billion increase).

Prediction 3: Identity woes

Those who view the whole world through the lens of identity – be it age, sex or race – will view the budget exclusively through that lens and be disappointed.

It’s become increasingly popular to break down government budgets on the basis of their impact on women and men. If the benefit of any decision is greater for men than it is for women, the budget is declared sexist and dismissed.

One commentator recently suggested the Morrison government belonged in The Handmaid’s Tale because of its “broader male-focused economic agenda”.

Another, less hyperbolic, example from the Australia Institute was a publication titled How to make the budget less sexist, which calculated that men will get more than twice as much benefit from the government’s tax cuts as women will. This was touted as a reason to jettison the tax cuts in favour of more government spending.

This ridiculous, reductionist, rhetoric should be rejected.

Tax cuts are not sexist because men receive a higher benefit on average than women do. Taxes are paid by individuals, not contrived, gender-based averages, and a man and a woman earning the same income receive exactly the same benefit.

What would be sexist, by contrast, would be providing government-funded superannuation top-ups to someone on the basis of gender.

The rumours are the government will attempt to spend its way out of its “women” problem in this budget, but they would be fools if they accept there is any legitimacy in identity-politics budgeting.

Despite claims to the contrary, supporting gender or racial equality should not be a valid goal of the taxation system. There is no limit to this: Ibram Kendi, for example, has argued that supporting capital gains tax cuts is racist.

Not only is there no way a right-wing government could ever win that game, it should reject even the playing of it, on the grounds of principle. Government initiatives must address genuine policy needs, not endless balancing of outcomes, on ever-thinner slices of identity.

My tip: the government will ignore my advice and try and sell a raft of new spending on the basis of gender. However, neither its supporters (who think identity politics is crazy nonsense) nor its opponents (who believe the government is sexist on ideological grounds) will give them any credit for the policies.

Prediction 4: The end of an era

I predict the last economic rationalists in the room will eventually turn off the lights. There was a time when fiscal conservatives viewed an approaching budget with anticipation. Back in this magical time, the budget brought news of surpluses, reduced debt, and a reduction in the tax burden on workers and companies alike.

Of course the government still wasted money – after all, that’s what governments do best – but the overall picture was positive.

Those days are now long in the past, and the handful of fiscal conservatives left in the country have a knot in their stomachs. Tuesday night they will be punch-drunk. A $200 billion deficit?

An extra couple of billion for a broken childcare system chasing two incompatible goals here, and a couple of billion for industry development there? “For everything else there is Mastercard” wasn’t supposed to be a country’s motto.

My tip: “Hey Google, turn the lights off.”