Dr. Jim Chalmers has delivered his third budget in two years, with some pundits suggesting it may be his last before an early election is called. Overall, the commentariat has not been favourable, with some exceptions.

Every budget has a showpiece that is turned into a soundbite to promote its political sell. The 2024 budget focuses on “cost of living” and “a future made in Australia”, encapsulated by the political soundbite “everyone will be better off”. However, it could equally be phrased, “have everything today and let your kids pay”.

The development of public policy in the modern era is increasingly reactionary. Success is measured by what is achievable over the next 6 to 12 months. Spending $3.5 billion to provide a $300 subsidy to every household is considered prudent, based on the logic that it will reduce inflation – at least for the current year.

There is little recognition that, like all subsidies, this might lead to additional spending in other areas. Nor is there any narrative about what will happen to individuals next year when the subsidy is unavailable. In Dr. Chalmers' world, being better off this year trumps any pain that may be felt when the subsidy runs out next year.

Like many budgets before it, this one exhibits a short sightedness, using examples of individual economic pain as rationale to continue expanding budget expenditure measures. Despite some attempts to reduce fraud, the NDIS remains an unconstrained expense measure, continuing to increase its stranglehold on the Budget position.

Introduced in 2013, the NDIS was developed as a “person-centred model of care and support”. The eligibility thresholds are based on individual needs rather than a budget limit, making it unconstrained. The cost of the NDIS has exceeded bureaucratic forecasts every year since its introduction. Reporting in the AFR in 2024 estimates costs will exceed $125 billion a year by 2034.

The "future made in Australia" theme has the budget allocating $1 billion to support innovative manufacturing facilities in Australia under the Solar Sunshot program. This program is designed to provide support to the solar industry incentivising private capital with the goal that we become competitive with the Chinese manufacturing juggernaut.

The $1 billion announcement has all the hallmarks of political shock and awe but in reality, it has no rigour or support as to why this is too much or too little capital. History suggests this program will be back in successive budgets requiring additional capital.

Politicians announce bold projects with unbridled optimism, and when they go awry, they hide the evidence. The Turnbull Government’s Snowy 2.0 project was originally a 4 year, $2 billion project that required no taxpayer funding. Estimates now have it at $12 billion and 11 years and hidden deep in the budget papers you will find an allocation of $7.1 billion to support Snowy Hydro’s continued construction.

The budget lacks supporting evidence of why Australia might have a comparative advantage in manufacturing. How can it? In the same week the budget was presented, the CEO of Mondelēz, which owns Cadbury, offered a sobering view of Australian manufacturing capability. High energy and transport costs, along with an overly complex reporting regime, combine to make manufacturing in Australia among the most expensive in the world.

When the CEO of an existing company manufacturing a mature product publicly comments on the benefits of moving their manufacturing elsewhere, it is difficult to see how a new entity entering a saturated global market will be more successful.

Perhaps Treasury should ask the Government where it has a comparative advantage. Is it in developing a productive industrial relations regime, a cheap and reliable energy source, infrastructure networks supporting manufacturing hubs, a competitive company and personal tax regime that encourages risk-taking … or do bureaucrats and politicians excel in seeing investment opportunities where private capital does not?

Second-order thinking is a powerful tool that needs to be implemented in all strategic decision-making. It asks the “what if” questions that successive governments, both federal and state, have ignored for the past decade. Asking the difficult questions and considering the range of outcomes from decisions can be a good antidote to jingoistic grandstanding.

Delivering public policy in soundbite chunks allows politicians to gloss over decisions that will impact future generations. This budget's approach to Australia’s debt position is farcical. It delivers a slim cash surplus on the back of record tax receipts from individuals thanks to wage rises, and from mining companies thanks to continued record terms of trade.

Celebrating the slim surplus, Dr. Chalmers has nothing to say about the biggest collective loan in history and even less about any plan to pay it back. In fact, the Treasurer plans for the loan to worsen with deficits extending into the foreseeable future.

Debt repayment is set to be the largest single item in the budget for years to come. The only historical method to reduce this impost is to increase productivity. The Reserve Bank has called for months for measures to increase productivity. In his budget speech, Dr. Chalmers did not even mention the word.

Public policy that focuses on appeasing individual pain with money will only find more people in pain wanting more money. It is a self-perpetuating cycle that will continue to erode our standard of living for generations.

Successive governments need the courage to approach budgets with policy settings that improve our overall economic outlook. Policies should reward risk and allow individuals to feel the consequences of their mistakes. Without this shift, Australia will continue down a very insecure economic path.