Fresh from abandoning a higher GST to fund lower income taxes, the Coalition has now ditched action to avert a "debt and deficit disaster", with Treasurer Scott Morrison declaring the path back to a surplus was more akin to Test match cricket than a Twenty-20 game.
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'Back in' earners, arrest spending
The fiscal priorities for the Commonwealth are laid out by Treasurer Scott Morrison to the National Press Club on Wednesday.
He said this meant any budget savings would be spread over multiple budgets stretching years into the future.
With the government moving towards an election later this year, Mr Morrison revealed existing programs would be spared the axe with "cuts" limited to proposed new spending.
"The spending reductions that we would seek to achieve by controlling new spending is designed to deal with the deficit," he stated.
"What I have signalled is controlling new spending, that's what I have signalled. I mean, you've described that as spending cuts. What I'm saying is we are looking to control new spending."
But the new Treasurer will not go the other way, sending a message to voters and to his colleagues alike, that there can be no "fistful of dollars" approach to the election.
Citing Treasury research that he said showed for the first time deficits themselves created a fiscal drag on growth, he said the government remained fully committed to repairing the balance sheet over time.
"There is no quick fix to it, there is no one statement, there is no one budget, there are budgets and budgets and budgets and budgets that are required to fix that problem," Mr Morrison said.
It came in a scene-setting speech in which he claimed the Coalition had trimmed $80 billion out of expenditure only to spend almost all of this again at $70 billion in new spending within the same term.
"We are basically in the same position that we were two years ago," he said, in comments apparently critical of his predecessors Joe Hockey and Tony Abbott.
Speaking later in the day, Cabinet secretary Arthur Sinodinos said the government was still planning "a substantial and comprehensive" tax package but said the government was now having to cut its cloth to suit the circumstances.
The new spending has occurred in variety of areas including additional national security arrangements, the ongoing military commitment in Iraq, and the provisions to absorb an extra 12,000 Syrian refugees.
Branding his forthcoming May budget "the first budget of the Turnbull government", Mr Morrison refused to be drawn on contentious areas such as negative gearing, capital gains tax, and superannuation concessions.
However, he indicated the government was determined to return bracket creep to middle income earners who have found themselves tipping over into the second-highest income tax bracket for earnings above $80,000.
The situation means the government is hemmed in with little of no capacity for fresh election spending, an expectation of income tax cuts, and a longstanding promise to deliver budget repair - all in an economy struggling to deliver trend growth.
"What we have found is that the only way to have lower taxes is to have lower expenditure. The tax mix, which is not going to solve that problem at that scale, the only way we can deliver longer term relief for people out there earning every day is to deal with the issue of expenditure," he said.
"Our view about the budget is that we want to put as much money in your hands to do the best thing you want to do with it rather than keeping it in ours."
The opposition attacked the speech as "waffle" that provided no guidance on future policy.
"More than five months as Treasurer and today we got 46 minutes of waffle, slogans and platitudes from Scott Morrison," said shadow treasurer, Chris Bowen.
"The only things left on the Treasurer's much-vaunted table, are incompetence, confusion, and indecision."
The government is understood to be examining ways to meet or exceed Labor's proposed savings by trimming superannuation tax concessions, and winding back the capital gains tax discount on property along with the negative gear arrangements applying to them.
However. Mr Morrison said those details would be released later.