From the sunny certainties established in the final years of the Howard-Costello era, where the tax take consistently overshot expectations and the Coalition government pretty much knocked up trying to find ways to spend the money, the nation has - with great speed - travelled to a bleaker, harsher environment.
In only its second budget, the Rudd Government has rolled the dice on its future policy options and its political fortunes. Short-term, the outlook is bleak. Unemployment, now at 5.4 per cent, will rise to 8.5 per cent by the end of June next year. In other words, a shade under a million unemployed. Government net debt, which was zero last year, will hit almost 14 per cent in 2014. In 2019, it will still be above 3 per cent. From here, there is no turning back.
Although the budget documents suggest the economy will bottom out in mid-2010 with a recovery beginning in the second half of next year, the cost of repaying the debt will cast a shadow over all future policy choices.
In just seven months, from the first economic stimulus package in October to tonight's budget, the political world has been transformed, from a surplus of $20 billion to a deficit of more than $50 billion.
The Government argues that if it does not push the budget into deficit at such speed, another 210,000 Australians, or 1.5 per cent of the workforce, would join the unemployment queue beyond the one million it expects to be out of work. But saving jobs is very expensive. While it's true - and the Government will point this out at every turn - that Australia's debt will be small relative to pretty much every comparable country, it is still the case that the program of repayments will restrict the Government sector for a long time to come.
Rather than being cowed by the challenge, Rudd and Swan have tried to harness the global economic downturn to their advantage, blending policy aspirations with their economic rescue effort.
Higher income earners are hit on a range of fronts - health insurance, family payments, super concessions - in order to help the Government pay for the tax cuts it promised at the 2007 election. More importantly there's also a massive nation-building quotient, with roads, rail, broadband, ports and research hubs. This sort of activity goes close to the heart of what many members of the Rudd cabinet want this Government to be about.
The court of public opinion will cast a sharp eye on this budget, which tries to roll back the public's entitlement mentality. Talkback radio lines will heat up tomorrow on planned changes to lift the pension age to 67.
What's for certain is that this budget has seriously boosted the drama quotient in the nation's politics. It cannot be any other way with the forecasts laid out in the budget papers.
So far, the public has given Rudd a leave pass on the economic downturn, accepting his argument that it was imposed upon Australia and not generated from within. But they won't give the Prime Minister a leave pass on getting the country out of the recession. Given the dimensions of this budget, with its spending programs and massive borrowing, Rudd has made it clear he's not one of those blokes who'll die wondering.
Shaun Carney is associate editor at The Age.
