Peter Costello’s theory for economic battle came in three chapters — do the hard stuff in the first year, bed it down in the second and fight like buggery in the third.
One of the biggest challenges for Malcolm Turnbull’s Government has been that it’s had to nail its economic pitch in two-thirds the time.
The double dissolution election in mid-2016 meant Treasurer Scott Morrison has been afforded just two budgets before the Coalition must again throw itself at the feet of the electors.
Barring some extraordinary upset in parliamentary planning, there won’t be another budget.
So Mr Morrison has had to make early preparations for the election, be it in August (if there’s a turnaround in Coalition’s electoral fortunes or if its triggered by political exigency) or in the first half of next year.
As a pre-election document it is relatively dour. Suspiciously so.
But the chief targets of the tax cuts spell out who the Government sees as being central in that fight.
The maximum benefit, albeit modest in size, goes to folk on incomes between $48,000 and $90,000. These are the same people whose votes will decide the election.
People earning over $125,000 will receive the smallest tax cut of $135.
In crude political calculations, they are considered more likely to be Coalition voters.
Their reward for keeping the faith with the blue side is embedded in the Treasurer’s seven-year tax plan, with the lifting and eventual abolition of the 37 per cent tax bracket by July 2024.
Given that’s two, or potentially three, elections away that tax aspiration looks dangerously like it lives in the never-never.
That’s not to say the seven-year plan doesn’t have some political value.
Of course having a bigger tax story to tell helps satisfy that desperate desire of every Government to satisfy the “vision” quotient.
But with its seven-year plan, the Government also seeks to inoculate itself against Bill Shorten’s Labor which continues to flay the Coalition’s unlegislated plan to reduce tax for the top end of town.
The 10-year cost of slashing company tax is about $65 billion. With its seven-year income tax plan, the Government gives itself a $140 billion rhetorical joust against the ALP’s criticisms.
The budget papers show the Government has struck some pretty luck in recent months.
Not only has it banked an extra $8 billion in extra revenue since the mid-year budget update six months ago, it predicts Treasury coffers being $35 billion richer over the next four years.
Of this, it’s spent about $15 billion, the bulk of which by ditching a plan to increase the Medicare Levy.
While this shows relative restraint, it leaves $20 billion in extra revenue hanging in temptation on the books.
A handy sum, you’d think, for a Government approaching an election. Especially one facing an Opposition that appears readying a sucker punch.
Labor’s already pre-positioning to offer bigger tax cuts and higher surpluses.
The risk to the budget bottom line is that the Coalition sees the need for a third wave of sweeteners.
Being abstemious is so yesterday when tomorrow might bring electoral oblivion.
Scott Morrison may be reaching for the Santa suit yet.