Budget reply, or much ado about nothing

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Much Ado About Nothing, Great Expectations or might it be Oliver with a Twist.

So far we have from ABC News,

Opposition Leader Tony Abbott is expected to use tonight’s budget reply speech to explain how he would pay for tax cuts in a first-term Coalition government.

This is indeed Great Expectations given the fancy footwork employed by Abbott’s Opposition to avoid anything resembling answering that very pertinent question, how are they going to pay for anything whatsoever. So let’s hear loud huzzahs for Her Majesty’s Opposition who tonight will reveal in their entirety how they’re going to pay for tax cuts.

Oh damnation, for a moment there I got all excited because…he’s not going to do that at all. 😦

The would-be prime minister has warned he will not spell out his full list of spending and cuts, but will instead wait for the pre-election economic and fiscal outlook to be released after the start of the election campaign.

Ok, I’m warned. Tony is waiting for a report to be released before he makes a commitment to anything at all.

Greg Hunt: “We’ll have a package of tax cuts for families without a carbon tax,” he said.

Yep, ok we’ve got that. Tax cuts without a carbon tax.

This is going to be good! We’re all going to get much moolah, plus do away with the big polluters having to pay for anything much at all. Money for nothing and chicks for free..to quote the poet, who at the time was in Dire Straits.

Wayne Swan: “He’s a man for three-word slogans, I think the three-word slogan that will lie behind Mr Abbott’s approach tonight is secret, savage, cuts.”

You would think that the reason why the Opposition are doing the fancy shoe shuffle on this question is because they don’t want to answer the question, that perhaps the Australian public will not like the answer.

But Abbott hath spake. He will reveal all tonight, about how he would pay for tax cuts.

Watch this space.

The Coalition: A Plan and few solutions

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It was with some trepidation that I ventured into the Coalition website titled: Real Solutions

According to the 12-points, The Plan (my summary) consists of:

• a stronger, more productive and diverse economy with lower taxes – more jobs, higher real incomes and better services for you and your family.
• Budget back under control, cut waste and start reducing debt – to keep interest rates as low as possible; and to protect the Australian economy from future economic shocks.
• help families get ahead by freeing them from the burdens of the carbon ax – especially rising electricity and gas prices.
• help small businesses grow and create more jobs – by reducing business costs and cutting taxes as well as cutting red and green tape costs by $1 billion every year.
• create stronger jobs growth by building a diverse, world-class 5-Pillar economy which will.. 
• generate one million new jobs over the next five years and two million new jobs within a decade.
• build more modern infrastructure to get things moving – with an emphasis on reducing the bottlenecks on our gridlocked roads and highways.
• We will deliver better services including health services – by putting local communities in charge of hospitals and improving co-operation with the States and Territories.
• We will deliver better education – by putting local communities in charge of improving the performance of local schools.
• We will take direct action to reduce carbon emissions inside Australia, not overseas – and also establish a 15,000-strong Green Army to clean-up the environment.
• We will deliver stronger borders – where the boats are stopped – with tough and proven measures.
• We will deliver strong and stable government that restores accountability – to deliver a better future for all Australians.

Is there anything new here?  Not that I can find.  A condensed version might be:  Stop the Boats, A Green Army, No Carbon Tax, No Mining Tax, to put local communities in charge of health and education and “restoring” accountability. On the latter, given that Mr. Cori Bernardi is chairman of a committee which scrutinises politicians’ declarations, and given Mr. Bernardi’s failure disclose his links to a right wing, pro-tobacco group which is fighting gun controls, that one might need some work.

It appears that not only are the Coalition intending to locate seemingly cyclopean amounts of money for “better services”, plus vastly improved infrastructure (which is to be commended) but also guaranteed are substantial tax cuts to basically anyone who considers that they pay too much tax, i.e. Everyone.  Plus all the while and simultaneously, bestowing on the country a surplus every year for eternity.

The Coalition has reaffirmed its commitment to delivering a budget surplus within its first year of government, despite there being no mention of the promise in a new policy document.

And how are the Coalition going to achieve this?  As per The Plan:  cut waste.  Simple isn’t it..

The figure previously put on this Mr Hockey said he stood by the $52 billion in spending cuts outlined by the Coalition before last year’s election, and dismissed Treasury criticism of its costings.

From an article in Macrobusiness titled Some questions for Joe Hockey :

If Hockey runs a fiscal surplus with falling business investment and a current account deficit, by definition other parts of the private sector must be borrowing to support growth. That either means selling a lot of assets or, more likely, a lot more debt for households, again inconsistent with Hockey’s larger pledge of living within our means.

And,

In short, Joe Hockey has an attractive liberal message that is right for the times. What he lacks (at least so far) is a policy matrix to match. He is basically offering a return to Howard era economic policy, which is for government to save and the private sector dis-save , and he plans financial reform to make it possible.

Today’s National Times leads with the headline:

Coalition sharpens its razor

Details are as always, sparse as to how the Coalition will achieve this, however motherhood statements and trite phrases do abound:

Tony Abbott:  “..but I tell you what … the fiscal position will always be better under the  Coalition because budget surpluses and reducing debt, paying back debt, that’s in our DNA.”

We are also told by an unnamed Liberal MP that we are ”lumbered with unaffordable policies”.  However, to date the only policies which Abbott has promised to axe are the revenue raisers, therefore where savings are to be made remains somewhat of a mystery.

Certainly axing the number of public servants will be greeted with loud applause; a simplistic and somewhat pompous pandering.  But how does one improve the delivery of services by reducing the number of people whose job it is to implement these services?  According to Tony Abbott, sacrosanct is his pet $3 billion paid parental leave scheme, family payments, and defence.  Which begs the question, if Abbott is intending to cut 20,000 public service jobs who will administer these, and where will his “15 thousand strong Green Army” come from?  Would not a Green Army be public servants?

Some clues as to the Coalition’s intended direction comes from previous statements:

Mr Hockey insisted that he supported the NDIS but raised doubts over his committment to delivering the scheme when he said he would not raise ”false hope” by committing to promises a Coalition government could not fund.

Mr Abbott has been critical of the government’s cash payments to families with school children, and yesterday the opposition voted against it in the Lower House.

Joe Hockey declared the “age of entitlement” was coming to an end: Speaking to Lateline, he said that Australia needed to scale back the size of its welfare bill to strengthen the national finances. But he declined to say which benefits would be put on the fiscal chopping block.

Babies are however to escape: Joe Hockey: Trimming Baby Bonus is Like China’s Murderous One Child Policy.

Editorial bullshit

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I’m not in the habit of reading the Herald Sun’s editorial. Actually, this morning’s was the first one I’ve ever read and I curse the individual who suggested I do so. In future if I want to read what Murdoch’s editors are thinking about I’ll grab a copy of Mein Kampf.

This morning’s editorial was written by a person equally as mad. A clear-thinking person could not have written such bullshit. I will dissect it in parts to support my claim. We begin:

The Gillard Government has finally admitted what Australians have long suspected to be the case. Its promised Budget surplus was nothing more than a political fantasy.

Economic data made it clear Labor’s much promised surplus was unachievable. Yet the Prime Minister and Treasurer belligerently stuck to their mantra in what can only be described as a cynical political ploy.

They should have admitted the inevitable long ego. The economic decision is the right one, as the Herald Sun has consistently advocated in the face of falling revenues and slowing growth.

Let’s see if I understand this. The decision is supported by the editor’s newspaper and more or less expected by the Australian community. Nothing wrong there. Labor are responding to the economic data at hand and, again, I see nothing wrong there either. All of a sudden our editor sees this as a cynical political ploy, which means he does not read Murdoch’s masthead paper, The Australian who almost two months ago wrote that “For a second day, Julia Gillard and Wayne Swan have refused to directly guarantee a budget surplus in 2012-13“. Sort of admitting the inevitable, in a way.

The editorial continues with:

But the Government ignored all warnings and has damaged consumer confidence in announcing what they should have come to terms with months ago.

People will ask, not unreasonably, if they can ever trust this Government.

Where is the evidence to support this? The evidence I found was the complete contrary to that claim. From Roy Morgan Research we learn that:

The weekly Morgan Consumer Confidence Rating is now at 117.4pts (up 2.4pts over the past week). Consumer Confidence is now a significant 6.2pts higher than a year ago, December 3/4, 2011 — 111.2.

Driving the rise was more confidence in Australia’s economic future and also in personal financial situations compared to a year ago.

Australians are more confident about Australia’s economy over the next twelve months with 32% (up 2%) of Australians expecting ‘good times’ economically compared to 28% (down 3%) that expect ‘bad times’.

Now 33% (up 1%) of Australians say their family is ‘better off’ financially compared to a year ago while 29% (down 4%) say their family is ‘worse off’ financially.

Over the next five years 35% (unchanged) of Australians expect Australia’s economy to have ‘good times’ economically while just 18% (down 3%) expect ‘bad times’ – the lowest since May 12/13, 2012.

Australians are more positive about their personal finances over the next 12 months with 39% (down 1%) saying they expect their family to be ‘better off’ financially while just 18% (up 2%) expect to be ‘worse off’ financially.

Unsurprisingly, the editor took a swipe at Labor’s economic credentials:

. . . ineptitude and political cynicism was behind the promise of a Budget surplus. It was to convince voters Labor was in control of the economy when clearly it was not.

Meanwhile, in the real world outside of the editor’s office:

The OECD’s latest economic survey of Australia released today shows once again that our economy stands tall amongst its peers, with 21 consecutive years of growth, robust economic fundamentals and a positive outlook in the face of acute global challenges.

The OECD finds that, unlike many developed economies, the Australian economy remains resilient, with successful macroeconomic management contributing to solid growth, low unemployment, contained inflation, and strong public finances.

The OECD commends the Government’s “exemplary handling of the global economic and financial crisis” avoiding recession in 2008-09.

Although the OECD notes our economy is not immune from risks in the global economy, the survey notes that “[t]he current monetary and fiscal policy mix is appropriate to sustain recovery, and Australia is in a good position to respond to risks.”

The report also highlights that the Government’s fiscal consolidation is part of a re-balancing of policy which “implies less pressure on interest and exchange rates, thereby alleviating adjustment difficulties for the exposed non-mining sector.”

While we understand that not everyone is doing it easy, this OECD report today is another reminder that Australians have a lot to be proud of and confident about.

Would the Herald Sun editor be bullshitting? Of course he would. Here’s why:

Today, the Herald Sun renews its call for the Prime Minister to call an election in March to allow the Australian people to decide who should govern this country.

Yes, in other words let’s organise a distraction from Tony Abbott’s embarrassing performances and Labor’s jump in the polls.

Let’s focus on what’s important

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Many of us are not surprised to learn that the Treasurer, Wayne Swan today announced that it was unlikely that Labor will be able to achieve the promised budget surplus in 2012/13.  For the purpose of this post I won’t go into any of the reasons or throw figures at you.

Economists are in unison, agreeing that the Government has done the right thing to drop the surplus commitment. Unsurprisingly, evidence of their support is very hard to find in our media online news sites. If you’re lucky you might catch a brief interview with one of them on TV. One of them might even be given the chance to explain why this is a good outcome.

The reason Australia was able to escape the Global Financial Crisis of a few years back was because it had the guts to spend money and thus create jobs. Again, I won’t go into that as we all know how Australia benefited from this bold, but necessary move.

Well, almost everybody knows we benefited. The exceptions being our Murdoch media and the Federal Opposition. And today we hear that this duo are still the world experts on the Australian economy. Today, their opinions take precedence over our economy. The online news sites are filled with nothing but their ‘valued’ opinions.

From that economic minnow Terry McCrann:

Wayne Swan’s decision to finally come clean and admit the bleeding obvious with the budget is just another cynical and dishonest move from a discredited treasurer in a completely discredited government.

It’s been blindingly obvious for months that there was no way the budget was going to swing miraculously from a massive $44 billion deficit last year to a tiny $1 billion surplus this year.

Indeed, it’s been obvious right back to budget night in May.

But Swan and prime minister Julia Gillard believed they had to keep promising a surplus, after her: “There’ll be no deficit in 2012-13 under a Government I lead”.

Swan quite deliberately brought the mid-year budget update forward, while the figures could still be massaged to still pretend to predict a surplus.

Even though the surplus predicted was pathetically, meaninglessly small.

Now he’s just as dishonestly chosen to tell the truth just before Christmas and the extended summer break.

Did McCrann focus on the economy? No.

BTW, how does one dishonestly tell the truth?

From ‘he who runs away‘:

Opposition Leader Tony Abbott said it was a “humiliating, embarrassing, nervous announcement from the Treasurer”.

Mr Abbott said the surplus was not a forecast – “it was a fact”.

“It has now been dumped,” he said.

“You just can’t trust this government to manage the economy. You just can’t trust this government to tell the truth”.

Mr Abbott said the Prime Minister made “two solemn covenants” during the election – the carbon tax and the surplus.

“She said that the day after she made the no carbon tax commitment. This second solemn commitment, this second covenant with the Australian people, dumped.”

“For three years they have been boasting of this surplus. Well, they don’t have that anymore”.

Did Abbott focus on the economy? No.

Even from Mr Eleventy:

Opposition Treasury spokesman Joe Hockey said it is “not in the Labor party’s DNA to live within their means”.

“Taking out the garbage five minutes before Christmas is the way the Labor party operates,” he said.

“They are treating the Australian people with contempt.”

Did Hockey focus on the economy? No.

And this front page non-story ‘ha ha I told you so’ from an un-named news.com reporter:

Treasurer Wayne Swan:

“We’ll be back in the black by 2012/13, as promised.” (May 2011)

“The government remains absolutely committed to delivering our return to surplus as we planned.” (August 2011)

“We’ve nailed our colours to the mast.” (February 2012)

“Despite the tough global conditions, we remain determined to return the budget to surplus in 2012/13, and we will get there.” (March 2012)

Prime Minister Julia Gillard:

“My commitment to a surplus in 2012/13 was a promise made and it will be honoured.” (April 2011)

“We stand by the predictions, the entries in the Mid-Year Economic and Fiscal Outlook. We stand by the figures and we’re on track to deliver a budget surplus.” (November 2012)

Did he or she focus on the economy? No.

Of course they don’t want to focus on the economy. It’s going gangbusters and will continue to do so.

Well done, Mr Swan, on what is another bold move. I don’t care what you said previously. You have the good sense to act upon approaching change, rather than react after the change.

As an aside, I’ve never supported the need for such a quick return to a surplus as I believe it has been the Government’s hasty response to pressure from the media, the public and the Opposition. Unfortunately they are going to be under attack from all sides over this. It’s my hunch that the leading economists in the country – who support the move – will be gagged by the media.

Is it too much to ask that the critics try and focus on what’s important, ie, the economy?

PS: This announcement has really let Abbott off the hook. He’s happy to face the media again.

Wayne Swan, Treasurer of Australia (Photo credit: Wikipedia)

 

 

 

 

The Opposition Says . . .

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At the time of writing the 2012 Budget had not yet been handed down, yet the media is filling its sites with “the Opposition says . . .” rubbish.  Here are some examples:

Opposition Leader Tony Abbott told his shadow cabinet that while Mr Swan would trumpet a budget surplus, it would be a surplus based on “fiddled figures”.

“Whether it will be the things that have been moved from next year into this year, whether it’s the things that are moved off the budget that should be on the budget, it will be a cooked books surplus,” he said.

Shadow treasurer Joe Hockey questioned how Labor could be returning the budget to surplus after a series of budget leaks suggested it was spending more than it was saving.

“Wayne Swan doesn’t know whether he is Santa Claus or the Christmas Grinch,” he told reporters in Canberra.

“On the one hand the government is making large announcements and handing out money, and on the other hand they’re talking about tough cutbacks.”

Mr Hockey wants to see the detail of Mr Swan’s “loss carry-back” benefit before supporting it, claiming it is an idea stolen from the coalition.

“I wish they would stop stealing our initiatives. They lambasted it at the time. Now they’re doing it,” he said.

He also refused to say whether he would back a new education rebate.

He described the government’s revamp of the education tax refund into twice-yearly payments as “dressing mutton up as lamb”.

Mr Hockey said the policy change amounted to giving out money to people whether they needed it or not.