Faced with a choice between ramping up tax or bearing down on spending, Joe Hockey has opted to stifle spending.
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His target is unprecedented – to limit annual spending growth of 1.75 per cent above inflation for a decade.
By way of comparison spending grew 7.6 per cent per year above inflation in the 1960s, 6.7 per cent above inflation in the 1970s, 3 per cent above in the 1980s, 4 per cent above in the 1990s and 4.4 per cent above in the 2000s.
In one year alone, 2017-18, the current projections have it growing 6 per cent above the rate of inflation. That's when Labor's long-term big spending promises on schools and disability care hit the budget.
Joe Hockey didn't say he would abandon Labor's commitments in his speech on Wednesday night.
He didn't need to – the numbers said it for him. The straitjacket is more severe than the 2 per cent target Labor adopted and proved incapable of meeting.
Winding back growth in government spending is hard without targeting entire institutions and services – just about the only thing Labor stopped short of doing.
It wasn't Hockey's only choice. The Commission of Audit made clear that another option would be to allow taxes to rise.
It could be done without even pushing up rates. All that would be needed would be to leave rates where they were and allow a decade of bracket creep to push more ordinary Australians into higher tax brackets.
It recommended against that courseand the Treasurer has accepted that recommendation. So we are in for another decade of tax cuts at least sufficient to stop our tax burden from climbing. Hockey also ruled out an increase in the 10 per cent goods and services tax "during this term of government".
It will happen as we watch what the government gives back continue to shrink. Hockey will stick by his election commitment to return the budget to a surplus of 1 per cent of GDP within a decade. He'll get there by imposing means testsand co-payments and by cutting services. In the centre of his sights are pensions and the Pharmaceutical Benefits Scheme.
It's just as well the economy has been looking up lately, although Tuesday's inflation figures make that less certain.
Take away government-related prices such as those for education, medicines and more heavily taxed tobacco and there was very little inflation in the first three months of the year. There would have been more if the economy was genuinely strong.
