John Tierney | Will the federal budget cash splash save Scott Morrison's government?

Five months earlier, the Coalition government returned to office after 13 years with a promise to balance the federal budget.

The Cabinet Expenditure Review Committee had scrutinised every line to eke out every possible saving until this mission was achieved.

This included my allowance of three newspapers a day.

The fiscal challenge that faced the new government was to fill the "Beazley $10 billion budget black hole", left by the previous ALP government. A $10 billion deficit? In the pandemic budgets of the 2020s, this now seems like an accounting rounding error.

Australia now faces a budget deficit of $78 billion and a net government debt of $715 billion in fiscal 2022-23.

Remember the Tony Abbott endless debit and deficit refrain with which he attacked the Rudd-Gillard government for their post-GFC "reckless spending?"

In their final budget, this reached only $23 billion.

The coalition government's obsession with balanced budgets reached its peak at the pre-pandemic MYEFO (mid-year economic and financial outlook) in December 2019, which almost brought the budget back into the black.

In an unfortunate display of political hubris, the Treasurer's office even distributed "back in the black" coffee mugs.

But as John Howard once said: "you never know what's around the corner in politics".

In early 2020, to his great credit, the pragmatic Prime Minister Scott Morrison was able to quickly "spin on a political dime" and throw away the Howard balanced budget political playbook.

Instead, he enthusiastically embraced the previously derided debt and deficit spending.

This was critical as Australia entered the COVID-19 era, our most significant health and economic crisis in 90 years.

But it wasn't just the government that had a change of heart.

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Over the quarter of a century since the election of the Howard government in 1996, the people had also changed their view on what should be the role and scope of government.

A more sophisticated Australia now wants the government to embrace a more significant and proactive role.

Focus group research reveals that people clearly see the gaps in the services that the federal government should be providing.

These policy shortcomings were brought into sharp focus by the COVID-19 pandemic, which exposed many weaknesses in national government expenditure.

These include aged care, health, disability support, training, infrastructure, energy, defence, and emergency response.

The 2022 budget recognises all these spending priorities.

However, will this year's allocated funding be too little, too late, given the growing backlog of urgent expenditure items in the above-listed areas of federal responsibility?

For example, inadequate aged care provision and our yawning defence capability gap will not be fixed in one budget or the four years forward estimates.

More significant progress could have been made had there been better management of government resources over the past 30 years.

The obsession with balanced budgets and producing surpluses created inadequate expenditure levels across many federal government responsibilities and services during that era.

Towards the end of the Howard government in 2006, it salted away $60.5 billion in a new Future Fund.

This was lauded as the very model of prudent financial management as if government budgets were like household budgets.

They are not.

People must manage their money in a limited life span and usually want to leave some of it to their children.

But, on the other hand, government is always there and needs to anticipate what is needed to support its national responsibilities well into the future.

What if instead of creating a future fund 15 years ago, that $60.5 billion, plus additional government debt, had been spent on those previously mentioned areas, which now have a top priority in the 2022 federal budget?

If that had happened, the task now confronting the Morrison government in responding appropriately in its critical areas of responsibility would have been much less challenging.

Also, the judgement of the performance of the federal government and the Prime Minister might have been less harsh.

It could even have been enough to ensure a win at the federal election in May.

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