Paul Bongiorno: Small targets and big deficits have government in a very hard place

by Paul Bongiorno

All of a sudden, an incumbent government asking its opponents where the money is coming from to fix the crisis in aged care is looking and sounding very tawdry.

Tawdry, because the cost of neglecting this human tragedy is immeasurably greater if it is ignored in favour of less-worthwhile priorities.

Undermining any potency to the attack is the government’s own budget papers revealing a deficit close to $80 billion and red ink as far as the eye can see and heading towards a gross government debt over a trillion dollars.

In other words, the question of where the money is coming from is just as relevant to Scott Morrison and Josh Frydenberg as it is to Anthony Albanese and Jim Chalmers.

Treasurer Josh Frydenberg should be asked where his government’s funding is coming from. Photo: Getty

The Liberals seem to be allowed a magic pudding for their announcements, while economic hard logic is lumped on Labor.

It’s all the more gobsmacking when the budget papers show Morrison and Frydenberg have spent $70 billion since the previous budget without any significant savings or offsets.

According to the accepted wisdom Labor governments raise taxes while Liberal governments cut spending, so when will the Prime Minister be asked to rule out massive cuts after the election should he win?

Albanese faced strident demands last week to rule out raising taxes.

He admitted only to wanting to get multinationals to pay their fair share and get rid of waste, insisting he was not about to raise other taxes.

In political terms, who can blame him given that the 2019 election proved yet again that any sensible discussion on how governments can pay for things is completely impossible in an election context?

And just in case you missed it because the Treasurer didn’t hang a lantern on it, there’s a tax increase in his budget that will hit 10 million Australians next financial year.

That’s when the low- and middle-income tax offset ends. It was boosted to a one-off $1500 maximum this year in what is its swansong.

Make no mistake, there is a hidden debt bomb in the forecasts due to explode in three or four years’ time.

Economist Stephen Koukoulas says the government will have to borrow in the vicinity of $23 billion a year just to service the interest payments on its debt.

It could even be more, given that we are rapidly entering a higher interest rate environment.

Both sides claim that growing the economy is the best and painless way to begin budget repair.

Let’s hope they are right. In the meantime, if we are going to plunge deeper into the red we should be directing the borrowing to worthwhile things.

And what could be more worthwhile than actually implementing the recommendations of Scott Morrison’s aged care royal commission?

The Prime Minister, in a series of contradictory blasts at Albanese’s $2.5 billion package announced last week with a blank cheque attached to fund wage rises in the sector, said Labor had signed up without knowing how much it would cost.

Morrison on the one hand said, “it was impossible to know what it is” and then went on to say he would “honour” what the Fair Work Commission decides.

The Treasurer on Sunday fudged what that honouring might mean but it didn’t seem to mean the government stumping up all the money providers would need for the overdue and – according to the Royal Commission – much-needed pay boost.

But here’s a window into the government’s value scale: In the budget Josh Frydenberg allocated $48.5 million to train 15,000 aged-care workers, but $2.4 billion was earmarked for apprentices in “priority” trades.

The government signed its own blank cheque to boost the defence force by 20,000 people, admitting the only way to attract recruits is with better pay and conditions.

The difference, of course, is that the Commonwealth is the employer of military personnel.

John Howard’s privatisation of the aged-care sector built in a profit motive which, as the Royal Commission found, saw providers skimping on food and care to protect their bottom line.

Mr Albanese's speech was a critical pre-election message for voters.
In a long-overdue reform, Anthony Albanese wants aged-care operators to show where funding is being spent.

Albanese’s plan is to give them more money and set up scrutiny to ensure they spend it as intended. A long-overdue reform.

Morrison complains that Albanese is a “small target” trying to skate his way into government and yet on the other hand says that the Labor leader’s commitment to fix the aged-care crisis is too big and too expensive.

So, there is nothing “small target” about this policy after all, but in hitting it the government has miscued badly.

It is arguing against itself and sending the clear message older Australians don’t deserve the dignity and respect its own Royal Commission identified.

Is it little wonder the latest batch of opinion polls have shown scarcely a dent in Labor’s substantial lead and that’s after $8.6 billion of direct vote buying in last week’s last throw of the dice pre-election exercise.

Paul Bongiorno AM is a veteran of the Canberra Press Gallery, with 40 years’ experience covering Australian politics