Happy Saturday!

The Federal Budget is fast approaching – three days away, in fact.

I’ll be heading to Canberra with a few members of the TDA team to cover it for you, so keep an eye out for a blow-by-blow breakdown on Tuesday night and a debrief on the podcast on Wednesday morning.

For background about what a budget actually is and why it is so important, you can read this piece I wrote last year.

In today’s column, I want to set the scene for this week. What should we expect?

Budget 2023: Treading the middle path

In an interview with TDA after his first Budget last October, Treasurer Jim Chalmers cast himself as a tightrope walker:

“I think inevitably when you do a Budget some people would like you to do more and some people would like you to do less, and you’ve got to try and find a responsible middle path between that… It is inevitably difficult. These are hard, thorny, entrenched issues.”

The ‘middle path’ he was talking about was between delivering the kind of social support voters expect from a Labor Government on the one hand and keeping the Government’s finances under control on the other hand.

Several months on, the Treasurer and the Government are still trying to walk this path, but the task is difficult. The cost of living crisis is still with us and some of the most vulnerable people in society are buckling under its weight. Balancing that with being ‘responsible’ is hard, and voters will judge the Albanese Government more harshly now that it’s out of its ‘honeymoon phase’.

Has the Government got itself stuck between a rock and a hard place? Here’s a closer look.

The Federal Budget is in structural deficit – that means the Government is consistently spending more than it collects in tax.

That gap has been filled by borrowing money, creating debt to be repaid in future with interest. Debt can be a handy tool to unlock more spending today, especially for countries like Australia with strong reputations that enable fairly cheap borrowing.

Still, keep taking on debt forever and the cost of all that interest will start to bite – it’s about $14 billion a year today but is one of the fastest-growing areas of government spending.

In a context where we continue to expect our governments to spend more – on health, on aged care, on disability care, on child care, on defence – this does create a challenge, one that successive governments have broadly failed to do anything about.

The Albanese Government has flagged its intention to tackle the issue. This Budget will be a significant test of its ambition.

At the same time, the Government feels pressure to provide more support for vulnerable groups, especially during an ongoing cost of living crisis.

Spending on this front is something voters tend to expect of Labor governments, and one clearly central to how Labor sees itself. As Chalmers put it to TDA last year, “a Labor Government [will] always want to try to find ways to be more supportive of the most vulnerable in our society”.

Or, as Finance Minister Katy Gallagher put it more bluntly last month, “there’s a whole range of very worthy ideas and I’m sympathetic to them, probably more sympathetic than a Finance Minister should be sometimes… I have a heart.”

The list of ideas many consider both “worthy” and urgent is a long one. There’s the call to raise the JobSeeker unemployment rate, currently well below the poverty line. There are calls from the Greens to do more to help renters, and criticism from the Coalition about rising power bills.

The task ahead for the Government is to decide how ‘generous’ it can be on these fronts without being ‘irresponsible’ – in its own mind, and in the minds of voters. As Gallagher added straight after asserting she had a heart, “there’s a hard edge to me… we can’t do everything”.

Appearing hard-edged without appearing hard-hearted is no easy task. The choices and priorities of a Government no longer on its training wheels is sure to be scrutinised this week.

What I’m enjoying this week

As my frequent TV recommendations in this segment might suggest, I'm an avid TV viewer. So I've been fascinated by the writers' strike unfolding in Hollywood. This long-form article from the New Yorker is perfect if you want to wrap your head around what's going on.

And here's a classic clip of Conan O'Brien killing time live on air during the last writers' strike.

A message from our sponsor

The post-payday adrenaline - that temporary bliss of not checking your bank balance as carefully as you know you should - is always followed by the seemingly inevitable: a scramble to stretch the dwindling remainder to the next payday.

Up’s Pay Day feature is designed with exactly this in mind. It factors in all the bills, rent, or other regular expenses you’ve got coming up and gives you a ‘spendable balance’ to put those numbers in context. With your bills taken care of you’re left to relax and wait for Pay Day to roll in again. Now that makes for a happy Saturday.

Use code TDA10 for $10 on sign-up!

Happy Saturday!

The Federal Budget is fast approaching – three days away, in fact.

I’ll be heading to Canberra with a few members of the TDA team to cover it for you, so keep an eye out for a blow-by-blow breakdown on Tuesday night and a debrief on the podcast on Wednesday morning.

For background about what a budget actually is and why it is so important, you can read this piece I wrote last year.

In today’s column, I want to set the scene for this week. What should we expect?

Budget 2023: Treading the middle path

In an interview with TDA after his first Budget last October, Treasurer Jim Chalmers cast himself as a tightrope walker:

“I think inevitably when you do a Budget some people would like you to do more and some people would like you to do less, and you’ve got to try and find a responsible middle path between that… It is inevitably difficult. These are hard, thorny, entrenched issues.”

The ‘middle path’ he was talking about was between delivering the kind of social support voters expect from a Labor Government on the one hand and keeping the Government’s finances under control on the other hand.

Several months on, the Treasurer and the Government are still trying to walk this path, but the task is difficult. The cost of living crisis is still with us and some of the most vulnerable people in society are buckling under its weight. Balancing that with being ‘responsible’ is hard, and voters will judge the Albanese Government more harshly now that it’s out of its ‘honeymoon phase’.

Has the Government got itself stuck between a rock and a hard place? Here’s a closer look.

The Federal Budget is in structural deficit – that means the Government is consistently spending more than it collects in tax.

That gap has been filled by borrowing money, creating debt to be repaid in future with interest. Debt can be a handy tool to unlock more spending today, especially for countries like Australia with strong reputations that enable fairly cheap borrowing.

Still, keep taking on debt forever and the cost of all that interest will start to bite – it’s about $14 billion a year today but is one of the fastest-growing areas of government spending.

In a context where we continue to expect our governments to spend more – on health, on aged care, on disability care, on child care, on defence – this does create a challenge, one that successive governments have broadly failed to do anything about.

The Albanese Government has flagged its intention to tackle the issue. This Budget will be a significant test of its ambition.

At the same time, the Government feels pressure to provide more support for vulnerable groups, especially during an ongoing cost of living crisis.

Spending on this front is something voters tend to expect of Labor governments, and one clearly central to how Labor sees itself. As Chalmers put it to TDA last year, “a Labor Government [will] always want to try to find ways to be more supportive of the most vulnerable in our society”.

Or, as Finance Minister Katy Gallagher put it more bluntly last month, “there’s a whole range of very worthy ideas and I’m sympathetic to them, probably more sympathetic than a Finance Minister should be sometimes… I have a heart.”

The list of ideas many consider both “worthy” and urgent is a long one. There’s the call to raise the JobSeeker unemployment rate, currently well below the poverty line. There are calls from the Greens to do more to help renters, and criticism from the Coalition about rising power bills.

The task ahead for the Government is to decide how ‘generous’ it can be on these fronts without being ‘irresponsible’ – in its own mind, and in the minds of voters. As Gallagher added straight after asserting she had a heart, “there’s a hard edge to me… we can’t do everything”.

Appearing hard-edged without appearing hard-hearted is no easy task. The choices and priorities of a Government no longer on its training wheels is sure to be scrutinised this week.

What I’m enjoying this week

As my frequent TV recommendations in this segment might suggest, I'm an avid TV viewer. So I've been fascinated by the writers' strike unfolding in Hollywood. This long-form article from the New Yorker is perfect if you want to wrap your head around what's going on.

And here's a classic clip of Conan O'Brien killing time live on air during the last writers' strike.

A message from our sponsor

The post-payday adrenaline - that temporary bliss of not checking your bank balance as carefully as you know you should - is always followed by the seemingly inevitable: a scramble to stretch the dwindling remainder to the next payday.

Up’s Pay Day feature is designed with exactly this in mind. It factors in all the bills, rent, or other regular expenses you’ve got coming up and gives you a ‘spendable balance’ to put those numbers in context. With your bills taken care of you’re left to relax and wait for Pay Day to roll in again. Now that makes for a happy Saturday.

Use code TDA10 for $10 on sign-up!