KEY POINTS:
Australian budgets now hold few surprises. In large part, they have been either announced or leaked well before the Treasurer delivers his Budget address to the House of Representatives on a Tuesday evening in May. Nonetheless, there was extraordinary interest in the Federal Budget for 2008-09 as it was the first time in more than a decade that a Labor Government had been charged with managing the nation's finances. The man in the spotlight was the new Treasurer, Wayne Swan.
Like Prime Minister Kevin Rudd, Swan hails from Queensland, where he rose to prominence as the Labor campaign director who ran the election effort that saw Labor's Wayne Goss win the premiership in 1989, after the party had been in the wilderness for 32 years.
In Opposition, Swan was one of the better performers and he campaigned flawlessly in the weeks leading up to November 24 last year, when the Rudd Government was elected.
But his weights were up. His predecessors, Peter Costello and Paul Keating, had dominated Parliament. They were the masters of parliamentary debate and readily used ridicule and invective, in almost equal measure, to demolish opponents. So expectations were high.
On Tuesday evening, Swan did not disappoint. He delivered a Budget that has been well received.
It's been a long time since the Australian Council of Trade Unions and the Business Council of Australia endorsed the nation's budgetary strategy. But this proved to be the case.
Indeed, BCA president Greig Gailey told the Australian the Budget not only represented a good start but incorporated several ideas his organisation had been pursuing for some time. So business is politely applauding.
While some pensioner groups complained about a lack of generosity, it's the front page of the Sydney Daily Telegraph on the Wednesday morning after the Budget's delivery that would have most impressed Swan.
The Telegraph sets the agenda in Sydney, especially for Rudd's favourite constituency: "Australia's working families". The Telegraph depicted the Treasurer in the playing colours of a Sydney Swan from the Australian Football League. This was close to the ultimate thumbs up from the nation's most influential tabloid.
At a glance, the Budget represents a balance. Bear down on inflation, but don't smother growth. The surplus is a little above expectations at some A$21.7 billion ($26.72 billion) or 1.8 per cent of GDP. To reach this figure, there were Federal cuts totalling some A$7.3 billion.
But the tax relief promised by Labor in the election campaign is to be honoured in stages, exactly as announced, totalling A$46.7 billion. This forms the core of a A$55 billion package to assist working families.
Those at the upper end of the scale (now defined as being above the A$150,000 mark per annum) will find certain welfare entitlements - baby bonuses, family tax benefits - beginning to disappear.
This is a long overdue reintroduction of means testing for Federal welfare spending. Labor has pushed the boat out on this and it remains to be seen whether or not the Coalition will follow.
As always in the Budget, there were gestures. The tax on luxury cars is up. And Federal assistance for the Donald Bradman Museum in Bowral has been spared the razor.
But the major new funds that are being created represent serious policy steps. In a sense, the Building Australia Fund (A$20 billion) and the Education Investment Fund (A$11 billion), together with the Health and Hospitals Fund (A$10 billion) represent a continuation of policy steps taken by the Howard Government in creating the Future Fund and the Education Endowment Fund.
The new funds are designed to focus on meeting Labor's election promises. To be fair, most commentators gave the Government high marks for honouring all of its election manifesto. In this vein, the Building Australia Fund will focus through Infrastructure Australia on priority projects in road, rail, ports and broadband. The other funds focus on tertiary education and the nation's creaking health system.
As to the overall projected impact, the Budget presupposes a fall of A$8 billion in revenue, due to the international credit crunch. Growth is projected to be 2.75 per cent, with unemployment predicted to rise to 4.75 per cent.
The Budget is built on an expectation of a continuing commodity boom, fuelled by surging economies in China and India. This seems to be a reasonably fair bet, but the Budget's first serious test will come in a matter of weeks.
This involves the Reserve Bank of Australia, which will be reviewing the interest rate regime. The Government has certainly delivered an enormous surplus and made spending cuts, although not nearly as severe as some had urged.
But the Rudd Government is treading the narrowest of lines, endeavouring to honour commitments and maintain growth, while convincing the RBA of its firmness and thus avoiding a recession. These require fine policy settings.
After the RBA, the next test is probably going to be the Gippsland by-election brought on by the retirement of former National Party minister Peter McGauran. Ordinarily, Gippsland would be just out of reach of a Labor gain. But the Rudd Government is riding so high in the polls, many in Canberra and Melbourne believe this seat has become vulnerable.
It's certainly a by-election campaign that will achieve far greater interest than usual.
Swan is emerging as a Treasurer who delivers precisely what he maintains he will deliver. His first Budget has been so well received that his confidence has clearly grown. This was evident in the Parliament and in the media conferences, particularly the National Press Club speech, which followed on the Wednesday.
In a global economy, national budgets are of less consequence than they were a generation ago. But this one was important in the message that it sent to the electorate and to the markets. It appears to have been given the blue pencil tick by both consituencies.
Stephen Loosley, a former federal president of the Labor Party and a senator, chairs the business advocacy group Committee for Sydney.
