12 May 2006

I see your budget and raise you

Costello's eleventh budget was a placeholder effort. It was always going to be given two elements: the lack of an election this year and the absence of a long lead-in to a major new announcement. Any big important announcement would have been smirkingly hinted at and selectively leaked - there was none of that because there was nothing to speak of, really. Lots of credit taken for surfing the boom and for belatedly adjusting the income tax scales.

Superannuation gets taxed three times currently: when it goes into the fund, whilst it's in there and when it comes out. If you were going to take one of these off, the one to go should be the inputs: this would have the incentive effects Costello was talking about, without imposing any disincentives on older workers thinking of abandoning the workforce. I think that super should not be taxed on top of other taes levied on pots of money managed by funds, but maybe that's too utopian given the sums we're talking about here. By cutting the tax on super payouts Costello has, despite all his rhetoric about older workers, nudged the boomers toward the exits. Give that man some slow-clapping applause.

It was short on big talk about infrastructure, apart from National Party sops like a new road from Kickatinalong to Wheelabarrowback to cart the pork-barrels along. Still no rail overhaul for heavy freight. Still no dual carriageway on the Pacific Highway.

Carn the Opposition!! Giiiiiiiit iiiiiiiiin there ... oh, I forgot, you're led by Beazley aren't you (*sigh*). Beazley benefits from low expectations when I say that his budget reply was his best speech ever. Finally, this is what you have to drive the man to in order to get some performance!

The opening gambit about the kitchen table and the fridge covered in bills had all the artificiality of the focus group, not any warmth or lived experience coming from Beazley. As the economy starts to buckle people may be in the dire straits Beazley described but they're on their way. It may have resonated better next year, but today all that's happening is Beazley tipping his hand to a shrewd opponent. The image about the poker machine was inspired, but better yet were the body blows on apprenticeships and training that have the potential to make voters sit up and take notice. He trod exactly the right line about training foreign apprentices without spilling over into xenophobia, something Howard can never do. The stuff about infrastructure was vague but better than the government's offering.

The government looked worried but fear not, Beazley will botch it. The applause from the galleries (if you or I tried that we'd be chucked out, but Labor stacked their people in) was a bit overdone, a bit shrill, and Beazley looked a little too pathetically grateful for it. Wayne Swan did not lay a glove on Costello.

Gillard and Rudd have been impressively disciplined in not undermining Beazley. The Labor leadership team after the election should be Gillard as leader, Rudd as deputy and Treasurer. Hopefully Beazley will recognise that he's had his go - if not he must, as Churchill said, be poleaxed. Gillard has the public pulling power and the prospect of growing into the role - the reason why the Howard government is not on the ropes over AWB shows the limits of Rudd's effectiveness at the top. Rudd would, however, make a diligent and thorough Treasurer. True, all Gillard has to show for herself policywise is Medicare Gold, but that's more than Hawke or Keating achieved in their parliamentary careers before 1983.

Beazley has shown his hand too early and the government will pinch what it can, draining Labor of momentum in the lead-up to next year's election. Beazley was never less convincing than when he talked about "a Beazley Labor government". He did his best, but Beazley's best will not get Labor into government.

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