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Apr 16, 2018

The Guatdian | Get set for a pre-election budget doling out the pork | Greg Jericho | Business, April 16, 2018.

theguardian.com

Get set for a pre-election budget doling out the pork | Greg Jericho | Business

Greg Jericho

This week saw the government continue its shift into budget mode with the announcement of proposed funding for a Melbourne airport-city rail link. It highlights that this budget, for all the talk you will hear about jobs and growth, will in reality be completely focused on the next election.
While Malcolm Turnbull does not need to call an election until May next year (18 May is the latest date), owing to the vagaries of the rules relating to half-Senate election, it can be held anytime from 4 August onwards.
Of course the current thinking is that no prime minister would be in a rush to call an election when he hasn’t won a poll for over a year. Why rush to electoral defeat when there’s always a chance that fortunes may change. It certainly can’t hurt to wait.
For his part, Turnbull is very much in the “no election this year” camp. He told Neil Mitchell on 3AW radio this week that the next election will “be in the first half of next year”.
But even with that period, it means that this year’s budget will be the last before the election and is in effect a pre-election budget.
This is a fortunate bit of timing for the government because the budget is in a much nicer state than was expected not only last May, but even last December when the mid-year fiscal and economic outlook was released.
The latest Department of Finance figures show the government has received $5.5bn more revenue than it expected in the current financial year when it updated the budget numbers for the Myefo. $3bn of this is from company taxes, $1.2bn from individual income tax and a further $1.2bn from the GST and other duties.
It means the government has a lot more money to play with – always a good thing when you feel the need to improve your standing with voters.
While post-budget poll bounces are largely more hoped for than achieved, it is always worth remembering that Tony Abbott’s 30 Newspoll losses began in the run up to Joe Hockey’s first horror budget in 2014, the release of which pretty much ensured polling would never recover.
The last thing Turnbull and Scott Morrison would wish to be doing at this stage in the electoral cycle is talking about the need to tighten belts; much preferred is to start bringing home the bacon. And that means doling out the pork.
This bring us to the announcement this week of $5bn funding for the Melbourne airport-city rail link.
The announcement is big enough to get the wow factor and is rail and thus has a vibe of being “good” – or at least better than building new roads (and certainly different from what Abbott would propose).
But don’t be fooled into thinking the focus of this week was infrastructure and economic growth; it was politics.
For a start, the $5bn funding is contingent on the Victorian government contributing the same amount. Now that is likely, but is also subject to a lot of negotiation over aspects including the actual route of the rail line.
Were it a proposal all about economic growth and need, you would expect the two governments to be making the announcement together; instead members of the Victorian government were nowhere to be seen at the press conference announcing the funding.
In a move that made his intentions transparent, the prime minister only sent a letter to the Victorian premier, Daniel Andrews, informing him of the announcement around midnight the night before. Handily, Andrews was able to read about the plan that morning as the Herald Sun had a big splash on it over its front page.
Yes, those who use the airport will like it, but despite the prime minister’s claims that “everybody in Melbourne uses this airport” the reality is they don’t and not in sufficient numbers that will see the benefits from a rail link be widely spread.
The prime minister argued that the rail link will be a “congestion-busting piece of infrastructure” and yet it is unlikely to do much unless coupled with increased tolls that actually reduce the demand for people to use the road.
A study for Infrastructure Victoria by KPMG-Arup and Jacobs concluded that that the project will “have minimal impact on overall demand for road and public transport” and that as result the main beneficiaries would not be users of the Tullamarine Freeway but rather “travellers and people accessing Melbourne airport for leisure purposes”.
Similarly, as Infrastructure Victoria noted in its 30-year plan, the optimum need for link will be in 15 to 30 years’ time – with the economically optimal opening year for such a rail link estimated to be between 2036 and 2039.
But that aside, no one is suggesting this will happen soon.
Even the prime minister has been cautious not to suggest construction would start before 2020, and Andrews has previously suggested construction work on the airport-rail link will be “well under way” by “the time the Metro Tunnel is completed in 2026”.
But the project is popular – not surprisingly Bill Shorten quickly came out in support of the proposal – and in a pre-election budget, popularity rather than economic need will take precedence.
Greg Jericho is a Guardian Australia columnist