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Dark clouds hang over government


This budget is very much about one of the dark clouds hanging over the government. No, not Craig Thomson. Or Peter Slipper. The carbon cloud.

A $3.6 billion ''Spreading the benefits of the boom'' package could equally be called ''softening the political impact of the carbon tax''.

A lump sum next month for most families with school kids, higher family tax benefits to look forward to in a year (not long before the election is due), and a new allowance for people on income support from March will all reassure those low and middle income earners feeling costs of living pressures, soon to be added to by the higher costs from the carbon price.

In fact, these people will be adequately compensated or over compensated under the carbon package. But they are feeling other pressures, and there is also a matter of perceptions.

No wonder Wayne Swan did not want to call this an ''austerity budget''. It isn't. There are a lot of spending measures.


The budget has plenty of ''saves'' too — about $17 billion in net terms. But some are relatively easy pickings.

The government has seized on the Coalition's opposition to the promised company tax reduction from 30 cents to 29 cents, which was part of the mining tax package.

The $4.8 billion measure is now scrapped and most of the money used for households in one way or another. When business screams the government will say ''go complain to Tony Abbott and the Greens''.

Nearly $3 billion is saved by deferring Australia's commitment to an international aid target. And rescheduling purchases has contributed significantly to the more than $5 billion in defence savings.

The budget will be unpopular with those hit by specific cuts and reversals of previous decisions. There will be a lot of noise around the particulars. Families will welcome the handouts, but whether they will regard them as simply entitlements to offset what they see as financial wrongs done to them, is another matter.

On balance, it will be surprising if the budget contains much long term benefit for Julia Gillard and Wayne Swan.