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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

fiscal discipline « Previous | |Next »
October 22, 2012

The consensus is that today's Mid Year Economic and Fiscal Outlook (MYEFO) is driven by political imperatives rather than economic ones. The surplus itself is a political figure as it is really to show that the Labor government can manage the economy.

Today's MYEFO statement seeks to replace $4 billion in lost tax revenue this financial year, and $21 billion over four years through savings and increases in charges. Swan has made good on his 2012-13 promise to return the budget to surplus, even if it does involve accounting illusions of shuffling money in the way that company tax is collected.

RoweDbudgetsurplus.jpg David Rowe

Gillard Labor continues to slowly dismantle the Howard-era policy of middle class welfare and subsidies for private health insurance. Rightly, as I cannot see the importance of the baby bonus--it strikes me as bad public policy. No doubt the conservative's rhetoric will be along the lines of " cooking the books" to achieve an "imaginary surplus", but the Coalition do have a track record of opposing the means testing of the Private Health Rebate and reducing the amount of taxpayer subsidies going to big business.

Today’s rather predictable MYEFO confirms that government spending, in real terms, will fall by a record 4.4 per cent in 2012-13 with government spending being 23.8 per cent of GDP. So we have fiscal discipline and loosening monetary policy from the Reserve Bank of Australia in a slowing economy that is due to the low growth of the global economy. The fall-off in revenues is largely due to the fall in our terms of trade — that is, the global prices of our exports have come off the boil. The Australian dollar continues to remain high.

In this context Labor's commitment to the knowledge nation takes another battering with cutting skills training and investment in research spending and higher education. Half a billion dollars will be cut over four years from a program that helps pay overhead costs for Australia’s researchers. How does that kind of cost cutting help to develop the future of Australia beyond digging up, and exporting minerals?

| Posted by Gary Sauer-Thompson at 4:52 PM | | Comments (6)


fiddling the books? The narrow $1.1 billion figure this year needs to take into account that there was a $43.7 billion deficit last year.

The Coalition are deeply opposed to an entitlement culture, yet they oppose Swan's cuts and limits to the public subsidies for private health insurance. They have decried that families would suffer from the new cuts in government payments and support; called the new cuts as 'social engineering''.

The long term problem was highlighted by the Treasury secretary, Martin Parkinson. He warned of the expectations gap - that voters expect more from government, and an ageing population might need more from government, than current taxation and spending settings can provide.

Education-bashing would be included to mollify the mortgage belt, who hate learning.
Middle class welfare is a cherished entitlement and without a corresponding offering to propitiate the beltway there could be an electoral backlash in the marginals.
It's the the ALP Right signalling their shared loathing for the latte left with the Kath and Kimmers, who know also that schools are for inculcation and discipline, not subversive intellectualism.
There was much resulting noise from Abbott and Hockey last night but no blow landed, indeed the little Alberici circled Hockey like a Stoat tracking an Angora bunny.
The budget surplus thing is fetishist, permeates the MBA's like an Aztec cult demanding of a constant flow of sacrificial victims to palliate the appetite for blood of the gods.

Cuts to the baby bonus and the private health insurance rebate – are going to be the political ­battlefield

Some argue that the successive personal tax cuts in recent years have left the budget too reliant on a vulnerable corporate tax base. Hence the calls for broadening and increasing the GST to increase the funding of the federal budget.