MYEFO: Christmas cheer for Scott Morrison but voters remain a new year challenge

MYEFO: Christmas cheer for Scott Morrison but voters remain a new year challenge

A stroll through the national accounts at year's end reveals a country steadily putting its finances back into shape after a decade of global upheaval and the stimulatory spending used to tame it.

And it shows an unpopular Coalition government unaccustomed to luck suddenly standing knee-deep in the stuff.

Australia's been lucky through 26 years of unbroken growth during which came the Asian financial crisis, the dot-com bubble, the mining boom with its trailing investment drought, and the Global Financial Crisis.

Through it all, Australia kept growing.

Prime Minister Malcolm Turnbull ends the year on a high.

Prime Minister Malcolm Turnbull ends the year on a high.

Photo: Lukas Coch

Before 2007, the Coalition committed to spending the proceeds of the boom as if they were permanent, and in opposition, caused the subsequent Labor government extreme political stress in handling the GFC.

Now in office, Malcolm Turnbull, who'd argued feverishly against most of Kevin Rudd's emergency spending, is riding its success.

Short of a surplus, a credible path towards one helps and nearing Christmas Treasurer Scott Morrison has received some good news including a bottom line improvement of $9.3 billion over the next four years, with the shortfall this year also smaller by $5.8 billion than was projected in May.

Luck and timing play as big a role in politics as they do in business.

Treasurer Scott Morrison.

Treasurer Scott Morrison.

Photo: Alex Ellinghausen

After a torrid year, governed by Murphy's law domestically, Morrison says "better days are revealing themselves" and Australia remains well-placed to take advantage.

Business is booming, which is fuelling jobs growth and boosting company profits. That means billions in extra company tax receipts for Canberra and savings in cash for unemployment, student and disability payments.

This is all positive for a government that increasingly feels it has turned a corner, but as always, it's how it plays out on the ground that matters.

Fiscally, the government can claim partial credit for the savings underpinning its surplus trajectory. But cuts cause political pain and there are yet more buried in this statement. These include extended waiting times for migrants needing welfare assistance, freezes on university funding, and cuts to after-hours doctors.

The other big negative is the decline in average wage growth to just 2.25 per cent and the resultant writes-downs in income tax receipts, and on consumer demand.

Here the government has no answers beyond its blocked business tax cuts. Personal tax cuts will help and seem certain to be announced next May. Inevitably, their quantum will disappoint.


Unhappy consumers are also unhappy constituents, which might explain why several thousand Liberal voters in Bennelong in 2016, switched to Labor in 2017.

Getting them back in 2018 will take something more tangible than a projected surplus three years down the track.

Mark Kenny

Mark Kenny is the national affairs editor for the Sydney Morning Herald and The Age, based at Parliament House

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