Budget reaction: It's like a long and tough home renovation

AN economics expert has likened the Federal Budget to a long and gruelling home renovation.

Dr Leonora Risse, a senior lecturer in economics at the RMIT University, said: “The Government did what many new owners do when they move into a new place: renovate. And as with any home renovation, they did a thorough review and clean out of the policy cupboard.

“When moving into a new place, there are of course some external factors that you can’t do much about. The high inflationary environment has forced prudent spending, ensuring that any outlays go towards activities that boost our economy’s productivity capacity and don’t exacerbate inflationary pressures.

“And a bit like termites infesting the walls, inflation is menacingly eating away real wages.

“The scaffolding underlying Australia’s budget structure is also a cause for concern. The budget’s trajectory of spending obligations is set to continue to exceed revenue sources in future years, in what’s known as a “structural deficit” of a magnitude equivalent to around 2 percent of GDP.

“A large part of this gap between spending and revenue is due by higher interest repayments, fuelled by higher inflation, and higher NDIS payments.

“There are lots of great home improvements in this government’s first Budget, especially in relation to gender equality and elevating equal opportunities for women as a core feature of the government’s economic priorities. But the shadow of a structural deficit also calls for another big renovation in years to come.

“Some elements of these policies also still have a question mark hanging over the logistics.

“With the extension of Paid Parental Leave, we don’t yet know how the allocation of weeks will be divvied up between parents.

“There were also sparse details on how the childcare sector could be supported to cope with extra demand for places that might be generated from the change to out-of-pocket costs to childcare.” 

Dr Risse is a Research Fellow with the Women’s Leadership Institute Australia and spent time in residence as Harvard University as a Research Fellow with the Women and Public Policy Program in the Harvard Kennedy School of Government. She is a co-founder of the Women in Economics Network and currently serves as the WEN National Chair.

Photo: Nathan Dumlao/Unsplash