JENI O’DOWD: Tough Budget decisions are needed to get the country back on track

A lot is riding on the May 12 Federal Budget, and not just for the Albanese Government, but for the country itself.

Because beneath the theatre of budget night lies the reality: Australia’s finances are under real pressure, and the window to deal with them is closing.

For years, the national conversation around debt has felt oddly detached from how most people understand it.

It’s framed in terms of ratios, forecasts and credit ratings — language that makes it sound distant, even abstract.

But that’s not how people experience debt in their own lives.

Anyone with a credit card knows the feeling. You can carry a balance for a while. You can justify it. You tell yourself it’s manageable, until it isn’t, and the interest skyrockets.

Then the only solution is to stop adding to it and start paying it off.

That moment has arrived for Australia.

Our national debt is closing in on $1 trillion, up by about $600 billion in just over a decade, according to the Australian Office of Financial Management. That’s about $40,000 for every man, woman and child in Australia.

I remember in 2006 when former treasurer Peter Costello declared Australia effectively debt-free.

“From tomorrow, our government will no longer be a net borrower,” he told the Committee for Economic Development of Australia in Sydney.

Now look where we are, two decades down the track.

Spending has stayed high since the pandemic. Programs have expanded, and the assumption that the country can simply absorb them has gone largely unchallenged.

This Budget must change this.

There are early signs of that shift. Moves to rein in the growth and abuse of the NDIS, one of the fastest-growing areas of government spending, is a start and long overdue.

But if the Government is serious about getting Australia back on track, it needs to go much further in cutting spending.

It means looking hard at the size and cost of the public service. It means asking whether every program now funded is genuinely necessary, or simply politically convenient.

It also means dealing with productivity, the thing that really drives living standards, but is too often pushed aside because it’s hard and takes time. Without it, there’s no real way to lift wages, ease pressure or grow the economy in a meaningful way.

And it means doing something governments don’t like doing, which is taking a hard look at themselves.

MPs should not be immune to the expectations placed on everyday Australians. If we are expected to tighten our belts, then they should be too.

Expenses, entitlements and the overall cost of politics should be put under the same microscope as everything else.

Angus Taylor has argued the Budget needs to focus on restoring living standards and getting government spending back under control. His approach is fairly simple: spend less, tax less and create the conditions for private investment to do more of the heavy lifting.

There will almost certainly be another round of cost-of-living “relief” in this Budget, but it needs to be tightly targeted to the people who actually need it, not spread so widely that it costs the country a fortune.

But the real question is whether the Government has the spine to go further. Will it announce meaningful spending cuts? I doubt it.

Over the weekend, AMP chief economist Shane Oliver told the Daily Mail that government spending was a key driver of the current economic pressure.

“Government spending has been a major reason behind Australia’s cost-of-living and inflation problem, and the blowout in spending on the NDIS has been part of that,” he said.

Traditionally, the most politically difficult measures are flagged in the days leading up to the budget, so that by the time it is handed down, the focus can shift to discipline and relief. That is why we heard about changes to the NDIS last week.

In the days ahead, more decisions will be drip-fed, carefully managed, and selectively briefed in an attempt to shape the story before budget night even arrives.

And that is part of the problem.

Budgets have become as much about managing expectations as they are about managing the economy. The politics is careful, calibrated and often cautious. The economics, however, don’t afford that luxury forever.

The Government must finally make decisions that are tough and uncomfortable. It means saying no, not finding new ways to keep saying yes to keep marginal electorates and interest groups happy.

Because while governments can stretch the narrative and buy themselves time, they can’t stretch the maths forever.

Australians already know what it’s like to live within their means — we are all trying to do it, despite higher mortgages, rents and everyday costs. The question is whether the Government will apply that same discipline at a national level.

Will this Budget actually start to turn things around, or will it just buy more time for the Albanese Government?

Because time eventually runs out, while debt doesn’t.