Federal budget band aids over policy failures

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I was interviewed by Bill MacDonald on Brisbane Radio 4BC for my take on the federal budget.

My overall view is that the budget was a giant fiscal band-aid to cover up the government’s policy failures around energy and immigration.

Below are key extracts from the interview.

Edited Transcript:

We have had this giant energy price shock when Russia invaded Ukraine.

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Coal prices went through the roof. Gas prices went through the roof. And the energy exporters who control these markets, who are foreign owned, they have made record profits. They are gouging us on these things.

80% of gas, for example, is exported overseas on the East Coast. These companies are making huge profits out of it. But they’re also charging us extreme prices. We’re paying global prices for gas, which we shouldn’t be.

The federal government is trying to ‘ease that squeeze’ by giving money to us.

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The problem is that the money is coming out of personal income taxes. It’s coming out of the broader consolidated revenue. It is not coming from the gas cartel.

Effectively, the government is subsidising us to give money to the gas cartel so that they can keep gouging us on energy prices.

While it does ease our cost of living, we are effectively paying that through taxes.

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Jim Chalmers say during his budget speech on Tuesday night said that when Russia invaded Ukraine, it sent global energy shocks. And that Labor is trying to relieve the pressure on households.

What Labor should have done is, as soon as they invaded Ukraine, they should have slapped a super profits tax on gas, for example. The same as what the Queensland Government did on coal.

That way, we would have gotten all this extra tax revenue, which would have gone to Australians.

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We own these resources. We would have gotten extra money. And we could have lowered taxes in other areas.

And we could have used some of that money to then subsidise our energy bills so that we didn’t have to pay global prices given that we own these resources.

But Labor hasn’t done that. They have effectively applied a band-aid to try to ease the cost of living but. But we are going to pay for that.

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It is the same with rents. The budget is offering rental assistance for low-income renters.

But this government actually created the rental crisis by ramping up immigration to never before seen levels. Extreme levels.

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This extreme immigration is what has driven rents through the roof and created the problem in the first place.

Asking rents

So, the rental subsidies are another band-aid to cover policy failures.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.