Assume a recovery. Assume fiscal sustainability. Assume that you can fool enough people to get yourself re-elected, probably at an early election!
If these are the worst global economic circumstances in 75 years, how is it that our recession will be less severe than the recession of the early 90s?
How is it possible to spend some $120b in new initiatives since the last election; to have to accept a collapse in Budget revenues of some $210b due to the global financial crisis; to spend more on short-term, one-off, cash handouts than on new infrastructure measures; and still be able to re-balance the Budget in just five years? Only if you assume it, by assuming unattainable growth rates!
How is it that we can hope to recover so quickly when the other major developed countries certainly don’t believe that they will, and that at least one million Australians will find themselves unemployed?
About the only certainty that I get from this Budget is that our economic circumstances will not unfold as forecast. The Budget deficit will blow out even more and growth will be much weaker. This should mark the end of any residual forecasting credibility of either the Treasury or the RBA.
Where are all those tough decisions that are to ensure a re balancing of the Budget and the repayment of debt? How is it that “we all have to bear part of the tough adjustments in these tough economic times”, yet the “pain” seems confined to those who earn more than $150,000 per year, but even then more than offset by the tax cuts?
However, if you are a single parent or unemployed, you will certainly be relatively worse off. Or, if you are about to retire, you may be forced to work longer, even longer than you had thought you would have to because the value of your super collapsed due to this global financial crisis. If this Budget is about jobs, and if we are to believe that there would have been 210,000 more unemployed if the Government hadn’t acted in this way, then how much is each job saved costing? At least $250,000 each job!
The only way I can make any sense of all this is to believe that the Government simply wants to be seen to be doing something to deal with recession, but not really caring how things will unfold, pushing the necessary tough decisions out beyond the next election, as it did with the Emissions Trading System.
Expect an early election, before the weaknesses of our economy and this Budget response become evident.
eeek. Shut up John yr freaking me out.
Shallow as it is, you lost me at the second exclamation mark.
Notwithstanding the shallow comments above, I believe that John’s comments require a more substantive analysis. It is quite well appreciated that the government’s assumptions on returning to surplus within five years are based on some pretty heroic estimates of growth. The unfortunate truth about an economic contraction is that the so-called poor are biggest consumers of resources and if economic output falls, ultimately consumption by the poor must also fall. Countercyclical expenditure may offset reductions in demand, but in effect these are being funded by borrowing from the future. There is no free lunch. Government deficits must be funded in cash flow terms by borrowing and these borrowings have to be repaid. Before repayment there is the inevitable interest charges which also have to be funded. One would hope that the capital expenditure decisions being undertaken by government have an economic benefit beyond immediate employment which seems to be the primary issue in terms of government being re-elected. Refunds of prior year tax payments do not appear to provide any sustainable benefit.
the thing about this government is that it is all about good politics, but bad policy.
-“hey let’s give out $900 stimulus packages to every single person that walks past! Free money for all!!!”
now that senitment is going to be great for you at the next election from the guy who’s just lost his job and has been told the bank are going to repossess his house. he thinks you are santa claus for giving him that money and you can probably count on his vote for the next 2 elections. problem is, he doesnt realise that by paying him $900, you havent employed him after his layoff and allowed him to earn significantly more than that in take home income.
Youve got his vote, but his quality of life is significantly worse off. Good politics, bad policy.
Say what you like about the Howard government. many people do. but at least they had the stomach to make the unpopular decisions. workchoices may have caused the death of the Liberals at the last election, but it showed their fortitude to make solely based economic decisions that the average man on the street doesnt understand, but are for the greater good. and the paid for it. but at least they were willing to put it forward.
Kevin “hey im just one of the blokes working Australia!” Rudd and Wayne “what is this economy everyone keeps talking about?” Swan have made few inroads with this budget. it is a decidedly average budget, with few shocks and a whole bunch of infrastructure spending that was scheduled to happen anyway. The progressive government has a chance here to do something that the Howard government never did and that is save the infrastructure of this country and really set the platform for the next 100 years. Instead, they have taken the easy, greedy way out which gives them the best chance of being elected next time around.
John is right, expect an early election.
(for what it is worth John, I have always appreciated your point of view, I think youre brilliant. unfortunately, you were too intelligent and honest to be a politician.)
I don’t agree with John Hewson. Most of the post is a shrill Liberal gloom-and-doom-Labor-be-really-afraid rant. I would have expected something a little more reasoned from him.
But an early election? Why would they bother? Having already dug half a hole, it’s seems a done deal that Turnbull and the Rich Lawyers Party are going to (foolishly) continue with their piously non-political interpretation of the word ‘opposition’, no doubt scratching their collective heads as the PPM & 2PP poll gap widens with each new Government bill maliciously blocked on spurious grounds.
By the time the election rolls around Labor will likely be stepping over little more than the sticky entrails to take the plate for a second term.
So no John, you are wrong on this call and shouldn’t have hung your hat on it.