May 16, 2008
I watched Brendon Nelson's Budget reply. His performance was okay (passionate populist outrage) but the content was pretty thin. The Coalition doesn't have many cards to deal with, given their recent talk about Rudd's budget as an irresponsible big spend high tax one ( despite the huge tax cuts) that soaks the rich (tax on luxury cars) and doesn't make enough cuts to government spending to constrain inflation that isn't a problem.
Leak
In contrast, the Coalition presents itself as a low tax party (so, in an overheated economy they would fuel inflation and increase interest rates, grocery prices and increase unemployment). As their fiscal policy is at odds with the RBA's monetary policy rather than working together, so their economic management credibility looks tacky and fractured. Their claim that they do not support higher taxes and higher spending is at odds with their record as a government.
Nelson's performance was probably enough to protect his leadership in the short term. The Coalition will block the tax on alcopops (its just a tax grab) the Medicare levy (defend private health insurance) and budget changes to income tests for the Commonwealth Seniors card in the Senate (formal equality). They will reduce the excise on petrol by 5 cents to make it cheaper (so much for enabling the shift to a carbon economy) whilst giving a high priority to dealing with the environmental challenge.
The Coalition's decision to oppose the tax on premixed spirit drinks (alcopops) on the same basis as spirits in general looks to me to be akin to political suicide. This is a preventative health measure designed to discourage excessive drinking among young people, particularly young women. All the tax does is tax the pre-mixed spirit drinks on the same basis as unmixed spirit drinks.
Julie Bishop on Lateline tried to justify the Coalition's opposition to scrapping the changes to private health insurance (increasing the threshold to pay the Medicare levy surcharge) as forcing people into a NHS socialist medicine model. Yet this is a tax cut that eases the penalties put in place by the Howard government to subsidise the private health insurance industry and shift people into conuming private health services. The language of choice--consumers can choose to purchase the products offered by the private health insurance---is now dumped in order to prop up the private insurance industry.
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Just like Krudd and his gang, Nelson can promise anything while he's opposition leader. Like Krudd has found out there is a huge gulf between dreams and reality.