Budget makes for a comfortable election battleground

Budgets are always seen as a statement of a Government’s direction and values – this is all the more so in an election year. The Victorian Budget 2022-23 is probably the clearest articulation yet of what the Andrew’s Labor Government intends to pursue as a platform for that election.

Although in many respects the pandemic is arguably largely behind us, there is no doubt the political environment will continue to struggle with its legacy for years to come. Huge levels of government expenditure to support people and the economy during lockdowns have been rightly recognised as necessary – but what will be the attitude to further expenditure and corresponding debt levels?

Problems with service delivery – notably the health system – have highlighted that governments must have the capacity to respond when facing crises, and the readiness to face future challenges.

How can we be less reliant on overseas supply chains that we have no influence over? And then there is the inflationary environment we now face as we come out of the pandemic – which has emphasised the concern many have with making ends meet.

The Government believes the public accept the need for increased levels of debt and it maintains those debts can be serviced and addressed, over time, by the dividend of a growing economy and an ongoing environment of low interest rates. They expect that - although rates will rise - it won’t be by enough to seriously undermine that position.

In simple terms – the Andrews Labor Government’s re-election agenda is infrastructure plus health equals growth, and debt can be managed into the future. The challenge for the Opposition in that frame is can it elevate the need to alleviate debt to a primary concern and what will it cut to address it? Oppositions can always raise questions of waste and inefficiency but if the election is fought on health and infrastructure – it’s being fought on ground the current Government is comfortable with.

But if the Government’s assumptions on interest rates and inflation are wrong, that situation may alter very quickly! But probably not before the election. For more from Alan click here.