Political Corrections

with Mungo MacCallum

Budget hit and miss

Stop the barbecue, we want to get off. This seems to be the initial reaction of a churlish electorate to the bounteousness of its ever loving government in restocking the griller with a barely digestible $37 billion (that's $37, 000,000,000) worth of chops and sausages for the next four years, almost a quarter of it arriving within six months.

You'd think the bastards would be grateful, but instead the majority of them want to go down the road to the health food bar. Of course, this just might be because most of them weren't invited in the first place.

To abandon the laborious metaphor (well, it was John Howard who called it a barbecue stopper in the first place) the budget does not appear to have been a popular triumph - at least not yet. Even the direct beneficiaries are not dancing in the streets, and they are a decided minority.

Mark Latham estimates that some 80 percent of Australians missed out on a tax cut and about 60 percent weren't included in the family package, leaving (according to his more excitable colleagues) a total of 140 percent of the population disgruntled. More numerate critics have been a bit more encouraging, but not much. A first estimate in The Australian gave the winners as 2.2 million families and 1.55 million individuals and the losers as 2.7 million families and 4.1 million individuals. Even Peter Costello, who seems determined not to count beyond nine, can see that this doesn't add up to too much celebration.

Moreover, even among the winners, the package is unconscionably skewed to the rich. If you earn more than $1338 a week, there's a 95 percent chance you'll collect a substantial handout, on average $40. But it's all downhill from there. At $800 a week the chance of extra money has dropped to 51 percent and the average amount to $26. At $400 a week we're down to a 19 percent chance of an average $22. And below $300, it's zilch, zip, zero. Truly, to him that hath shall be given.

It is hardly surprising that the first polls found that two thirds of those surveyed said they would receive absolutely no benefit, and more than three quarters said the budget would not affect their vote. More ominously still, those that said it would were twice as likely to swing to Labor as to the coalition.

Howard was right in declaring the poll a bit bodgie, and that it was too early to count; some of his colleagues fancifully said that all the media attention to the apple Danish royal wedding had obscured the budget's true beauty. But first impressions can often be the lasting ones and if Howard was hoping for a big budget bounce to secure a swift and painless trip to the polls, it is looking less and less likely.

Moreover, the targeting, about which the pro-government critics have been so flattering, does not really stand up to examination. The idea, it was thought, was to reward and bribe the swinging aspirationals, the hard-working, highly mortgaged young families in the suburbs.

But hang on. This makes the tax cuts a bit superfluous, in that those earning over $1000 a week are more likely than not to vote Liberal already, and if they don't, they're not going to be bought by a few extra bucks in the kick. And while the big sweetener, the family package, may be closer to the mark, it may still miss the seats that matter.

Of the coalition's most vulnerable 24 seats - those held by a margin of less than five percent - just one, Parramatta, is in the Sydney suburbs and one, Deakin, in the Melbourne suburbs. True, there are five around Brisbane and another two around Adelaide, but these are not real aspirational territory. The other 15 are all rural/regional, where incomes are generally low and dependent children increasingly thin on the ground. Similarly, there are only three marginal Labor seats (Banks and Lowe in Sydney and Chisholm in Melbourne) that fall directly into the budget target zone.

We'll have a better idea of how good Howard and Costello's aim was after the money starts to flow on July 1, but right now it looks as if quite a lot of it may have missed, and even some of the hits could be pretty ineffective. There are still an awful lot of people who say they would rather it had been spent on health and education.

In the circumstances it is hardly surprising that Mark Latham's first response has been to let it go through to the keeper and return to his broader themes, including the dreaded ladder of opportunity. Critics complain that he has not yet produced much new in reply; that too is understandable, given that Howard and Costello have spent almost all the available money for the foreseeable future.

Latham will, of course, have to do something about his promise of broader tax cuts to cover the real middle income groups (the median is $35,000 a year, with half the nation's taxpayers earning less) but he can afford to wait until things settle down. With the polls the way they are, Howard won't be going to Government House anytime soon.

On budget night he gave two dinners at Parliament House for his supporters. The big one, upstairs, cost $1500 a ticket; the one downstairs for the troops was a mere $200. The proles, of course, were left outside in the cold. It was the perfect metaphor for the budget as a whole.