The budget no one wanted – and could have been skipped

Ex-Tropical Cyclone Alfred had an impact on the Labor government’s pre-election budget in more ways than one.

Treasurer Jim Chalmers had signalled last week that the impact of the weather event would put a dent in the economy and on Tuesday night reiterated it could “wipe a quarter of a percentage point off quarterly growth”.

However, the storm is also the only reason Chalmers was delivering a speech at all.

As has been well publicised, Prime Minister Anthony Albanese was all set to call an election and forgo the early budget, but concerns around making the announcement while Queensland and northern NSW was being buffeted by severe rain scuppered Labor’s plans.

Instead, they pivoted and rushed to hastily pull together a budget that no one wanted to happen.

As things stand, they probably shouldn’t have bothered.

What we got on Tuesday night was bare bones and closer to an election pitch than a complete budget.

The main document that is of note for experts analysing the government’s plans is Budget Paper No. 2 – a routinely dense and extensive piece of work that contains all the important details.

Opening the document when it went live at 7:30pm AEDT, the length was confirmation of the pre-budget speculation.

It may not necessarily sound like it, but this document, measuring 93 pages, is shockingly thin. Last year it came in at 200 pages, and even that was a bit smaller than usual.

The situation was even more dire for financial services, which was all but ignored.

Indeed, the only really impactful measure is one that wasn’t even included in the budget: the $3 million super tax.

Essentially, as the government made no mention of Division 296, it means they haven’t moved away from either the proposal itself or their methodology in calculating it.

The controversial change to superannuation tax settings for large balances would see earnings above the $3 million threshold taxed at 30 per cent rather than the current 15 per cent – including unrealised capital gains.

It will now continue to haunt the government as an election issue following multiple attempts to get it through the Senate have been thwarted.

Had the government changed its calculus, it would have needed to be mentioned in the forward estimates, as the flow-on effects for the amount of tax generated (forecast at about $2.3 billion in its first year of operation) would hit the budget bottom line.

As SMSF Association chief executive Peter Burgess said, Labor has committed to Div 296 “warts and all”.

Looking at financial advice, there was once again not a single mention.

Last year, there were notoriously more mentions of sweet potatoes than financial advice, however this year, the budget was so sparse even the tubers didn’t rate a mention.

Following the budget announcement, Financial Advice Association Australia general manager, policy, advocacy and standards Phil Anderson noted the lack of news and how “light on detail” it was.

“Notable omissions for our profession include any CSLR or ASIC levy relief and no action on access to the ATO Portal,” Anderson said.

“The lack of detail in the budget follows the recent release (on Friday, 21 March) of the next tranche of draft legislation for the Delivering Better Financial Outcomes reforms, which were also frustrating in their lack of scope and detail.

“It is disappointing that the government has not been able to move ahead on a clear pathway in improving the accessibility and affordability of financial advice, at a time when an increasing number of Australians would benefit from professional quality advice.”

Perhaps the government would have been better off if it had skipped the budget altogether.