THE federal budget delivered to the parliament this week was a curate’s egg – good in parts.
It was a blatantly political document by a government desperate to improve its standing in the polls.
It promised a surplus simply to avoid another Opposition attack about another “broken promise”.
It was a political necessity (not an economic imperative) in our two-speed economy, where many of the non-resource sectors are teetering on the brink of recession.
It was all about wealth distribution, not wealth creation. It splashed cash in a blatant to attempt to buy votes, with the added political advantage of being able to overcompensate for the unpopular carbon and mining taxes.
It sold (i.e. explained-spun) this as “sharing the benefits of the mining boom to families and businesses across Australia”.
Treasurer Swan emphasised “this Labor government knows that for too many Australians this feels like somebody else’s mining boom. Someone else’s prosperity”.
However, rather than doing what in the past it had described as “the right thing”, namely using the proceeds of the mining tax to fund business tax cuts, superannuation, and essential infrastructure, it did what it had consistently criticised the Howard government for doing with his mining boom, namely splashing it around in short-term “benefits”, rather than using it to build our economy/society for the longer term.
Don’t get me wrong; some of the benefits to low- and middle-income families struggling to meet the ever-rising cost of living, in particular, were most welcome.
However, they should be seen for what they really are, namely bribes, in the hope of winning votes.
And the poorest, the unemployed and some single parents, missed out altogether.
Of course, this was all wrapped up in the claim, “Staying true to our Labor ideals and to the promise of a fair go, converting economic success into real benefits for the majority of Australians”.
Me senses an election in the air. Me senses a testing of themes and slogans for the next federal election.
The promised surplus will never be delivered – their track record alone should tell you this. They originally predicted a budget deficit last year of some $12 billion, which was soon revised to $22 billion, and then revised again to $37 billion, and then in this week’s Budget revised again to $44 billion, and this is not yet the final figure.
The surplus figure was produced by a combination of innovative accounting (by moving expenditures back and forth) and by assuming unattainably strong economic growth.
It would only take the mining tax to earn half what is predicted (which many in the industry have been saying) and the surplus would evaporate.
It failed as an economic document for two reasons.
First, it failed to offer any program for now urgent, broad-based, economic and social reform, and, second, it left our economy particularly vulnerable to the substantial downside risks in the global economy, especially from Europe and China.
In fact, it explicitly left “demand management” to the Reserve Bank.
However, in the event that they would need to stimulate the economy, the RBA may be powerless to do so, as while it can always, and should, lower its official interest rate, this may not be passed on by the banks.
The best bits were the start to a National Disability Insurance Scheme and some aged care initiatives.
However, the tens and tens of billions of dollars that will be needed to properly fund these initiatives are nowhere to be seen
This story Administrator ready to work first appeared on Nanjing Night Net.