Treasurer Jim Chalmers has raised the hurdle for his budget next year because if Tuesday’s effort was designed to get the conversation started, that is when decisions will come.
The next budget is only seven months away and the window of political opportunity in taking tough decisions early in the election cycle is fast closing.
Budgets get plenty of attention but of course, they are not the only forum to make decisions. Chalmers has started his conversation and nudged the budget in the direction he wants, but having established his credentials as “solid” it’s time for Chalmers to make the tough calls.
Small business does best when the economy is performing well and not only has Chalmers told us the economy will slow, there is precious little from the government to help the cause.
There is not much he can do about the rest of the world but there is plenty to do at home.
Wage growth is already off the table, but decision time is still to come on industrial relations reforms, including pattern bargaining, which is an anathema to most in small business.
The best news is the budget has not made things worse by fuelling more inflation, which should mean the Reserve Bank rate hikes will peak next year.
Some positive small steps were taken in the budget, including an increase in the immigration intake, $20 billion to re-wire the nation for the change to renewables among other climate commitments, $10 billion for housing, a better child care funding model and flexibility around paid parental leave.
Talent shortfalls is one of the big issues facing small business — from dairy farm to corner store — and better rules around immigration and young travellers helps.
But productivity growth is expected to fall from the already parlous 1.5 to 1.2%, which underlines the lack of real reform in the budget.
The Australian Competition and Consumer Commission (ACCC) has emerged as a key weapon for Chalmers in his fight against big energy, but the tactic of using the competition regulator as a political tool has to end because the agency’s credibility will suffer.
Chalmers has already stretched the limits by giving the ACCC the job of reviewing childcare as part of its reform in that sector. Just what childcare has to do with competition is hard to see.
However, the ACCC did score extra funding to help fund its extended remit.
Its day job includes merger reviews and this week it added a new inquiry onto the Viva acquisition of 700 Coles petrol sites to put it at more than 1300 sites.
It would be far better to implement more competition, starting with the digital platform recommendations sitting on Chalmers’ desk for a new code of conduct for the sector, as well as better merger rules to put the onus on merging companies to show how their deal improves competition.
The hard work needs to continue with the states to achieve genuine competition reform because they administer the key programs.
The federal government has laid the ground to sharply modify the stage three tax cuts, which on any rational measure should be unveiled in the next budget and while it is at it, why not pursue fundamental tax reform too?
Threats to increase regulation are one thing; actually doing so in a way that doesn’t hurt the economy is another.
Next year the Productivity Commission will hand down its wishlist for the next five years, but Chalmers already has plenty to work with from the last five-year report, Shifting the Dial, which was left unattended by the last government.
That report centred on the service sector, which accounts for 80% of output and 90% of employment in Australia, all a long way from the sheep’s back or iron ore mines.
Healthcare, education, aged care and NDIS disability support are just three behemoths ready for the government to help with better regulation and funding models.
The budget was a step in the right direction now the real work begins.
John Durie has been a business reporter for 40 years, starting his career in the Canberra Press Gallery in 1980. John worked for 13 years as Chanticleer Columnist for the AFR, four years as business columnist for the New York Post, and also worked in Paris.
Comments