Analysis

The Ethics of Making an ‘Election Budget’

15 April 2019

At a first glance, the 2019 Australia Budget looks too good to be true—the first surplus in forever! Tax cuts, which is basically free money, for everyone! Cash payments! Amazing!

Until, of course, you realise that the federal election was announced for May 18. There’s no doubt that many elements of the coalition’s budget are designed to appeal to voters and keep the current government in power, but is this a cheap ploy with dubious ethical considerations?

The short answer? Short term thinking is a bad idea. By producing a rosy and optimistic budget designed to impress for only the month after its release on April 2, the government deprioritises genuine growth for the Australian economy.

After a tumultuous few years for Australian politics, the next few months don’t seem to be getting any smoother. Scott Morrison surprised audiences by delaying the announcement of the federal election, which was predicted to have been called for May 11th. Labor is arguing that this delay in election is to use a greater amount of public money on partisan ads, but also for the government to ensure that the general public are convinced of the budget’s success.

When the election eventually comes, people will have to decide between a Labor government under Bill Shorten or a Coalition government under Scott Morrison. There are a multitude of factors that influence the final decision for voters, of which the budget only comprises one part. Similar to the US, ideas of character likeability and trust play a large role in determining a vote. A disclaimer – unlike the US elections, Australian voters don’t vote for the PM, but rather the party. As Australia’s political climate is scattered with characters ranging from unpleasant to downright villainous, it’s hard to see a winning personality influence the outcomes.

Other factors that influence the outcome of elections include historic voting choices; what you grew up voting and who your parents voted for have a large sway in your future voting choices, regardless of your stance on key issues. On the other hand, some votes are solely based on a party’s stance to a singular, divisive issue such as marriage equality and asylum seekers.

The budget may have less weight than the government places on it. But one place in which the budget plays a big role in determining the election is in the swing seats. For instance, in the ultra-marginal seat of Corangamite in the Geelong region, the budget has allocated a $2 billion investment in infrastructure for fast rail, in an attempt to keep voters Liberal.

But, perhaps, is this how democracy is supposed to work? When people are unhappy with the state of country, the government has to set out goals of meeting the people’s needs in order to stay elected. However, manipulating the budget for self-gain is a distortion of democracy, not an expression of it. After all, it seems unethical and downright unfair for the government to allocate the budget not on a needs-based basis, but rather on areas with an indecisive voter group, meaning areas with seats that are securely Labor or even securely Liberal do not get the resources they require during election budgets.

Josh Frydenberg, who has only been treasurer for three or so months, came out with the bold statement that for the first time in over a decade, Australia is having a budget surplus.

Let’s unpack that.

To make that grand achievement, there were several slights of hands, lucky global occurrences, and a hiding of the grizzly parts that would look less appealing on a glossy election package.

The attention-grabbing promise of delivering a surplus of $7.1 billion next year is based on cutting the National Disability Insurance Scheme, an already underfunded venture. Cutting billions in funding for Australians with disabilities accounts for 23 per cent of the proposed surplus.

Australia’s gross debt is still growing and expected to reach over half a trillion in the 2022-2023 financial year. But despite that, Frydenberg benefited from a global fall in interest rates for government debt. The government’s interest bill on national debt decreased by $1.3 billion compared to what was expected for this financial year due to the interest rate falling from 2.8 per cent to just 1.9 per cent.

Another move appealing to future voters were the widespread tax cuts, the shining glory of the budget.

Implementing tax cuts for lower- and middle-income earners to get votes is a cheap jab under the guise of bolstering national spending, especially as Australia doesn’t have a spending problem; it has a revenue problem.

While Australia’s government spends more than the US, compared to other liberal democracies like the European countries, it spends far less. And over time, government revenue will only decrease due to demographic changes caused by the aging population. Already, the structure of our tax system and superannuation is stacked in a way that older generations are paying less and less yet requiring more and more government funding in health and aged care.

Fundamentally, the 2019 budget tax cuts, which will cost the economy $158 billion over ten years, are the epitome of short-term self-interest over long-term consideration for the Australian economy.  

As long as election terms continue to remain at only three years, these kinds of politically hungry budgets are inevitable. A three-year cycle means that at most, the party in power has only two years at most to help support the economy, especially when you consider how long it takes for policy to be successfully implemented. While the United Kingdom isn’t currently a great source for inspiration on how government should be run, their election terms last for a full five years.

As the federal election looms close, voters need to look past the ruses and ploys of the budget to make an informed decision on what policies align with their values the most.

 


One response to “The Ethics of Making an ‘Election Budget’”

  1. Robert Leach says:

    Great article! Yes, basically all economists agree: we don’t have a government spending problem, we have a revenue problem, but governments (and especially this one) are too focused on short term vote winning to carry out the structural tax reforms (cf Henry Tax Review) that are obviously needed.

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