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May 9, 2012
The Gillard Government's 2012 budget has been and gone. Most of it was strategically leaked in advance in an attempt to help transform the government’s bad public image and to fend off another Opposition attack about another "broken promise". It probably change the bad image.
There was no attempt to invest in Australia’s future productivity and growth through genuine funding increases to higher education, scientific and medical research, in nation-building infrastructure, in innovation in small firms throughout the economy, and greater steps to decarbonise the economy---eg., axing the diesel fuel excise rebate.
The budget was designed to give some credence to its claims for economic competence and to put a floor under the downward spiral of unpopularity with new family payments (the long shadow of John Howard's deserving poor) from the new mining resources tax, and the now scrapped 1 per cent cut to company tax. It's wealth redistribution not wealth creation says Big Business through hissed breath. It doesn't build business confidence. Class warfare say others.
All the headlines in the media are about the Craig Thomson affair not the decline in tax revenue (GST), or the real decline in expenditure as it is the former that is the lever for sustained period of conservative political dominance.
The hostility (anger? resentment?) to the Gillard Government won't be shifted by a budget surplus and the increased funding for the National Disability Insurance Scheme, payments for families, funding for indigenous development, dental and mental health, aged care, communications infrastructure, compensation for the pricing of carbon.
Budget surplus, increased funding and retaining Australia AAA credit would be called responsible fiscal management --fiscal conservatism--- if it was done by a Liberal Treasure. Labor is no longer willing to make the argument that employment and growth are more important than reducing debt, and it has abandoned its brief adventure in defending Keynesian economics and the need for a larger role for the state.
The underlying Treasury assumption is an optimistic one of good economic growth because of the mining boom, even though commodities markets have softened and the risks within the global economy have re-surfaced in Europe.
The budget really turns on the economy doing much better than a lot of people now think.
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Cutting defence was a good idea.
Can we expect another low-quality political attack on the government from the Coalition.