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May 14, 2008
Will the tightening of fiscal policy make a difference to squeezing inflation? Will inflation stay above the Reserve Bank's target band? Will most of the work have to be done by the Reserve Bank as high continuing inflation flows through into higher wages and prices? Spending has been cut but not by enough to offset the $7 billion in tax cuts.
Moir
The snip and tuck pruning of the Howard government excess is the downside side of the Swan budget. The upside is the nation building--- investment in health, infrastructure and education, and a more constructive relationship with state governments. Defence spending is up university spending is down. So what happened to the education revolution? Where is the military threat to Australia's security? Why not cut the increase in defence spending and put the money into universities?
I'm yet to read the budget papers about the implications of climate change and emissions trading. Since nobody is saying anything I presume that the budget papers do not address these issues. They are postponed to the future. The amount being set aside( $2.3 billion) looks inadequate. The spending has been announced before and some of it has been pushed back.
As Anna Rose observes in New Matilda Rudd and Swan missed this opportunity to make historic shift in Australia's economy by not investing enough in climate solutions to start the shift to a low carbon economy, cutting back on subsidies that encourage us to pollute and using the money to encourage emission reductions is essential.
Consequently, the proof of the Government’s commitment will become apparent when it delivers on its promise of an emissions trading system and, crucially, the target it sets in the medium term
On the other side, after the Liberal years of economic policy that drove greater demand and consumption in the short term, we have an ALP starting to make productive investments needed to underpin longer term economic growth.
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They won, but the global economic climate, or the economic conditions is changing----see Barry Hughes good article at New Matilda, and its not looking too good for Australia. But no one--the economic mandarins--- knows what is going to happen.