Ah, Budget Day.
It's pretty much Christmas for those of us who are both finance and politics nerds (you can send my wife your pity).
I've written before about why I enjoy it so much and value it so highly, but it boils down to two things – all of the government's planned income and expenditure in one place, and the fact that no matter how imperfect our system is, we are able to vote for our preferred candidate and then the government of the day is required to stand up and outline how they plan to handle the nation's finances over the next year (with projections further out).
Does that make me Pollyanna? Probably. But when we stop valuing those things we risk losing them. So, I'm happy to be a nerd, and I'll be watching the Treasurer's speech tonight.
And what are we to expect tonight?
Well, we know some things, thanks to the stage-managed Budget 'pre-announcements', designed to maximise coverage for the government.
And a good old-fashioned Budget 'leak' (read: off-the-record phone call to select journos so you can grab this morning's headlines) of a $4 billion Budget surplus.
It seems to be a 'nip and tuck' Budget, with some targeted spending, likely offset by a welcome (at least, from the national balance sheet perspective) jump in tax revenue thanks to higher commodity prices, company profits and personal income tax collections, and less welfare spending, specifically on unemployment benefits as the unemployment rate remains at historic lows.
Those are the numbers, at least.
Whether the changes in each line item are justified is in the eye of the beholder, of course.
It strikes me as hard to complain about a boost to JobSeeker, given how far it has fallen below average earnings over the past couple of decades. And raising the eligibility age for the Sole Parent pension (it used to cut out when the child turned 8, and is being lifted to 14) seems logical, given the care needed by kids when they're between 9 and 13.
And I reckon as a very wealthy country the least we can do is make sure people can afford to heat their homes over winter.
Some readers will disagree. Others will say it doesn't go far enough. As I said, the eye of the beholder.
And what do I hope for?
I'm not sure I'm prepared to hope for things that seem remarkably unlikely. That just feels like setting ourselves up for disappointment.
But what should the Budget offer?
That's easier.
The government should do what successive governments over the past couple of decades have been unwilling to do: chart a course back to structural balance, where the deficits in the bad years and offset by surpluses in the good years.
And it should go further: finding a way back to a modest structural surplus, using the extra funds to pay down the government debt.
Why? Two reasons. Firstly, the interest on that debt is getting expensive. Second, the more debt we carry, the less flexibility we'll have to respond to future crises without dire consequences.
Is debt always bad? No. Is there a case for keeping some? Yes.
But is it prudent? And the right thing to leave for our kids? No. No, it's not.
There are lots of other things worth addressing, too. I'd meaningfully cut back the dog's breakfast of deductions, subsidies and programs, most of which are a combination of vote-buying and unsupported ideology.
I'd increase resource rents further (and put them in a sovereign wealth fund), collect more tax from multinational corporations, remove negative gearing from future residential property purchases, re-index CGT (scrapping the 50% discount) and completely overhaul the NDIS, which has become a honeypot for fraud and gold-plating (the recipients deserve support, but we can do it without the bureaucracy and middlemen).
And here's the thing. I think Australians probably pay too much income tax. But I don't think the government collects too much tax revenue. The difference? The abovementioned boondoggles, deductions, minimisation and avoidance. I have a suspicion that if we got serious about that stuff, there'd be more than enough extra money (after structurally balancing the budget and paying back most of the debt) for income tax cuts, too.
But to finish, I want to go back to where we started.
What I really want from tonight's Budget is a document that sets out the sort of country we want to be – incentivising effort, while looking after those who need assistance; offering both a fair go and a helping hand.
That outcome is within our grasp. What we lack is the vision and guts, right across the parliament. Will tonight be a new page? I don't know. I'm not prepared to hope, but it's what I think we deserve.
Tomorrow, I'll be back with a summary of my thoughts from Budget night (and, well, something else that I can't talk about yet…).
Fool on!
