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

a 'horror page' in our economic history? « Previous | |Next »
May 13, 2013

It's hard to arouse much interest in the 2013 budget and its deficit. The latter has become a fetish.

We know that government revenue is declining, and that this means the naive commentary that the deficit is caused by a profligate, wasteful Labor Government blowing the revenue from the mining boom and maxing the credit card is too one sided.

The Coalition continue to deny that Labor's fiscal activism in the form of a fiscal stimulus insulated the Australia economy from the external shock of the global financial crisis that would otherwise have produced a deep domestic recession. The revenue decline will be a condition the Coalition has to deal with, if it gains power, because it is a consequence of the recession in the global economy that is due to the global financial crisis caused by Wall Street.

Secondly, the Howard/Costello Coalition also went on a spending spree---- they actually spent, or gave away as tax cuts, a staggering 94 per cent of the windfall gains delivered by the China-driven mining boom's first phase.

PettyBBudget.jpg Bruce Petty

The Coalition is contradictory: they are saying that they will spend big on a family-centred welfare state and to the middle-class, as well as saying that they are committed to the politics of harsh austerity and that the era of ''universal entitlement'' is at an end. They wont reverse all those tax cuts that Howard and Costello gave to the middle class, whilst their direct action plan to achieve the bi-partisan target of a 5 drop in emissions is going to be paid for by taxpayers.

The Coalition have yet to acknowledge that the unusual strength of the Australian dollar and the breaking down of the historical correlation of the dollar and commodity prices has been due more to other countries debasing their own currencies and to capital flows for the Australian dollar than to local actions of a Labor Government in Canberra.

| Posted by Gary Sauer-Thompson at 2:29 PM | | Comments (12)
Comments

Comments

Big Business want an end to the budget chaos; a credible return to surplus and an overhaul of tax, carbon and workplace policies.

They say the reform agenda has died--even though big business has opposed almost every major reform presented by the Gillard government.

Reform for Big business means that business pays less tax and is less regulated.

Yes,
One can always find excuses when your footy team loses, others to blame, the refs a mug, the playing field wasnt grassy enough but at some point you must say to yourself at the moment they are a crap team and start building again with young players.
6 years down the track they may be playing finals again.

The negative impact of the global economy on the Australian budget and a high dollar applies to both the Gillard Government and the Coalition if it gains power in September.

Les,
Costello had used the windfalls from the mining boom to create election sweeteners that had long-term costs on the budget, like the taxation cuts and the bloated family payments system.

That has set up a long-term budget crisis with the fall in government revenue due to the fallout from the global economic crisis. It's a structural problem.

Yeah yeah... Its all costellos fault.
And howards too.

Only you are saying that Les. The others are saying it is a structural problem that affects both sides of politics.

Is the media:
[A]stupid
[B]ignorant
[C]deceitful
[D]all of the above
[careful, the last option is a tricky one]?

Even though the long-range forecasts provided by Treasury have not been reliable for some years now, the Gillard government's response has been to take the optimistic approach throughout.

It has often planned to spend what hasn't yet been collected. The revenue shortfall has caught them short. Hence their desperate hunt for savings in this year's budget.

fred,
here's a list of the naive commentary courtesy of a column by Rob Burgess at Business Spectator:

The levels of fantasy obscuring the big issues are staggering – the economy is failing (it’s not); it’s mostly due to the carbon tax (it’s not); we’re on our way to a Greek-style debt crisis (wrong); the current slump in corporate tax, GST and mining tax revenues was entirely predictable (only the last was); and, emergency stimulus aside (because it did prevent a cascade of small business failures), the Rudd and Gillard governments have spent in more profligate style than the Howard goverment (wrong again)

He adds that the problem is that all these fallacies have been easy for the opposition to spin, particularly when the Canberra press gallery has spent so much time chasing Kevin Rudd’s supporters down rabbit holes.

Gary
I don't think the commentary that Burgess refers to is naïve. Or fantasy.

The commentaters KNOW the reality, they have better access than any other social group to the information and analysis concerning the issues to which Burgess refers eg NOT carbon tax [sic], failing economy, wasteful govt etc [with dozens more examples possible eg climate change, poverty, NBN, gender violence ....and so on].

And they are not stupid, these are educated, experienced, informed men [mainly].

They CHOOSE to present these issues in the manner that they do DESPITE the reality and their, perhaps reluctant and denialist self is not allowed to get in the way of their deliberate deceit of the public.

Its ideology. Its propaganda.

fred,
re the Canberra Press Gallery---- its ideology+plus a lack of knowledge about policy issues (economics, health, energy), as distinct from the politics of a particular policy.The economic knowledge of the Canberra Press Gallery is abysmal--they have little understanding of how the global economy works.They cover it by accepting ideological accounts.

Am sad to see Fred has chosen to muddy the troubled waters (pour oil on them?) with multiple choice.
He should tailor his comments to the intellectual capacities of his readership.