I understand that there was some kind of budgetty thing on tonight.
If you’ve got a lot of time on your hands, here’s the Budget papers.
So what goodies from Unkie Wayne did I miss while I was out enjoying a very nice meal?
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Tanner’s good on lateline: he’s pointing out that if govt revenue hadnt collapsed by $210b, this budget would be balanced in 2 years, and surplus in the third.
He’s also comparing Turnbull & Hockey to those 1930s conservative governemnts who turned the recession into a full blown depression by contracting spending at a time like this.
I might also add: what all this idiotic guff from the Opposition to the effect that “you wouldnt run a household this way,,, bler bler”
Bollocks!! In fact, rvery household is in hock to the eyeballs, and not expected to be back in surplus for 25-30 years. They’re called *mortgages*.
I might be reading it wrong, but it sounds like they are getting rid of the solar (photovoltaic) residential rebate from 1 July 2009 ($8,000 per kW, means tested) and just providing funding via RECs, which will be about $3-$4,000 per kW.
When will we be debt free again?
Razor, when you say “debt free”, do you mean:
(a) government (public) debt?
(b) private (commercial) debt, from mergers, takeovers, etc?
(c) household (consumption) debt, mortgages, credit cards, etc?
(d) foreign (consumption) debt, for all the stuff we don’t make here and buy overseas?
Because (a) + (b) + (c) + (d) has never been less than 100% of GDP. Under Sheriff Johnny, we went from having a large public and no foreign debt, to no public and a large foreign and household debt, as govt reduced spending, household spending had to rise to fill the gap; not really an improvement, just shuffling things around.
Steve: I think that was already on the books. Our local solar buying collective’s website explains it thus:
“From July 2009 the SHCP $8000 means tested rebate will end, but for 3 years RECs will have a 5x multiplier applied to them for the first 1.5kW of any system, before tapering off in each subsequent year to 4x, 3x, 2x and finally no multiplier. At the current REC price of $45/MWh a 1kW system will attract an incentive of about $4950 (down from around $8990 or up from around $990 if you can’t get the rebate), while a 1.5kW system will attract an incentive of about $7425 (down from around $9485 or up from around $1485 if you can’t get the rebate). ”
Note: REC’s have been down to $15 (early 07), so it’s a bit of a punt about the payback period, and an REC, as I understand it, is a MW.hr, so the same capacity system in no-cloud Capricornia will earn more than in shadier climes.
Didn’t hear anything inspiring like allowing folks to attract the rebate by investing as greenbond holders, perhaps via super contributions, in the 3 fold higher efficeencies, (in renewable energy output to grid bang / buck investment terms), of utility-scale installations in high insolation locations like Capricornia, compared to the output of this bijou semi-shaded suburban PR exercise.
Like someone said somewhere:”the biggest dissapointment in Australian political history”
Kiashu – very very clever aren’t you?
“as govt reduced spending, household spending had to rise to fill the gap; not really an improvement, just shuffling things around” – really????? Proof??
Make sure your facts are up with your spin.
Him not saying “temporary deficit,” “working families,” and more importantly, the size of the deficit (53.1bn (crikey) or 57.6bn (all else,) take your pick) in the speech.
Razor, forgive me, but this debt thing is a bit of a yawn. Tanner said we would peak at 13% of GDP, Tony Jones said it was 20% for Canada, 70% for Europe and the US, 140% for Japan.
The basic arithmetic of the budget seems very simple to me. Revenue is down $210b over four years, about $50b per year. So we had a deficit of $57b, which means Swan basically squibbed it in inflicting pain. Just moved things around a bit.
I think it was a lost opportunity. They could have switched everything around and rearranged thing to their hearts desire. Those feeling pain would have thought they were doing their duty for the country.
The most surprising aspect was Treasury’s heroic forecasts of 4.5% growth from 2011-12. Still that’s after the next election and a lot can change by then.
The whole thing was quite optimistic really, with Swan on a nation-building theme.
The debt thing can get boring, but you can’t blame Razor for reacting. I mean, Kiashu makes the hilarious claim that foreign debt was zero in 1996. Kiashu also gets extra points for the mindless ‘Sheriff Johnny’ reference.
BBB
“Tanner’s good on lateline: he’s pointing out that if govt revenue hadnt collapsed by $210b, this budget would be balanced in 2 years, and surplus in the third.”
I don’t quite get this. Is he saying that without the GFC/recession the ALP would still have turned in two successive budget deficits? That can’t be right.
BBB
Ah the budget! Rudd this evening has just signed his own death warrant metaphorically speaking.I am 56 I represent the very people that are going to sling him out.If he thinks people are going to cop working until they are 67 yrs old on the stroke of a pen, he has clearly lost the plot.
I have been a Labor supporter all of my life, I will not be voting for Rudd again along with my wife and three children, who incidentally nearly fainted in unison with us when we heard the news, as long as my arse points to the ground.
My telephone this evening has been ringing off the hook,my mates are speechless, who ever the num nut was that dreamt this up, I humbly suggest get your super and get out now.
I think raising the pension age is a good idea. As expected lifespan increases and medical technology improves, it makes sense.
Don’t worry, Robert, there will be plenty of pissing and moaning about the country going to hell in a handbasket in Wednesday’s newspapers and the online commentariat to make up for anything you may have missed while you were out having dinner.
As far as Big Kev signing his own death warrant with this, that’d require the opposition to offer an alternative that could actually deliver the death blow, which at the moment I see no particular sign of them doing. Just look at the ongoing adventures of the NSW ALP; we can’t get rid of them even after an election they shouldn’t have been able to win because the Liberals offered nothing in return.
“Just look at the ongoing adventures of the NSW ALP; we can’t get rid of them even after an election they shouldn’t have been able to win because the Liberals offered nothing in return.”
I wouldn’t confuse federal and state politics.
The Labor Party are finished next election,and I will take that to the bank.
Marlon
The pension age will start to rise in 2017 when you will be 64 or perhaps already 65 and rise by 6 months every two years, so you are likely to be able to claim the pension at 65 years and 6 months. Of course you can actually retire whenever you want if you have enough super, since this is the pension age not the retirement age.
Marlon @ 11 & mates;
“working until they are 67 yrs old on the stroke of a pen”? Rubbish! You can retire today if you wish. All the Budget says is that you can’t claim the OAP until you’re 67; not say can’t draw on your superannuation until you’re 67 or have to work until you’re 67. That gives you another decade+ to squirrel away a retirement income! By 2020, you’ll have accumulated at least 30 years of tax-payer subsidised superannuation. The whole idea of compulsory national superannuation was ensure people could support their own retirement
Rudd this evening has just signed his own death warrant? Howard did a similar thing to women’s pensionable age, raising it incrementally from 60 to 65 (the budget that introduced the GST, I think). Can’t remember too many howls of protest then, and neither GST nor increased pensionable age cost Howard the next three elections!
Marlon, when the old age pension was introduced less than half of the population lived long enough to collect it. Since then people have been living a lot longer to the point where most people expect to collect it for a considerable period. That’s quite a different thing for the taxpayer to fund. If the pension age was death-rate adjusted it would now kick it at about 80, not 65.
Unfortunately it’s a bit late for you to change your approach and decide to pay extra tax or saving more to provide for the retirement 3/4 of the way through your life that you apparently feel entitled to. But for people like me it’s the other way round: I see the pension age rising, the pension amount falling and the tax burden from retiree’s medical care rising without limit. So my expectation is that my generation will pay significantly more tax over our lifetimes than our predecessors, have fewer career opportunities, less security and that retirement will happen much later than we would like.
Not to mention the huge accumulated carbon debt that we’re inheriting in leiu of all the formerly endangered species that are now extinct (as well as other pollution). Thanks people, you’ve really made a difference.
Subsiding RECS really irritates me, because it means that to get the subsidy I have to sell the RECS. Which largely defeats the purpose of the solar panels. Sure, now I have a more secure electricity supply. Great. But I’m still using coal fired electricity while I sell futures in my green generation to major polluters. Hooray me!
Not that it matters, I’ve decided that buying shares at IPO in green generators then buying their green power is a better use of my money. I expect that we’ll have to go off green power at the end of the year then back on in order to count for the CPRS calculations though. Nonsense, but that’s Rudd’s environmental policy for you.
Was the budget on last night? Oh well, missed it again.
Did you know, though, that an Indian bloke has avoided washing for 35 years except for the “fire bath” ,every evening, when he stands on one leg beside a bonfire, smokes marijuana and says prayers to Lord Shiva?
Bet Unkie Wayne didn’t beat that.
http://au.news.yahoo.com/a/-/newshome/5562098
The revenue downturn is mostly spin. Take a look at table C1 in budget paper 1 (also shown on the ALS blog) and it is clear that revenue in 2008-09 and 2009-10 will still be higher than 2006-07 which was an historic high at the time. So Rudd pulls in more revenue in the worst year than Howard did in any year (and he was pretty good at fleecing us). And in 2006-07 the budget was in surplus so there was already room to increase spending without going into the red. Plus there was money set aside in the future fund so they could spend that on one off things like a modest amount of infrastructure without going into the red.
The bottom line is that the deficit is a product of a massive hike in public spending. And whilst this gets a big tick from the business lobby (surprise, surprise, big business likes big government) it is ordinary people that will pick up the bill. It seems like a lot to pay for more traffic and an Internet connection that I don’t actually need.
Terje: are we talking real or nominal revenue here?
how much of that public spending is explicitly new initiatives, and how much of it is the extra unemployment benefits we’re going to be paying out over the next couple of years?
Furthermore, how much of that new spending is due to the fact our population continues to grow, and grow older?
Finally, given that at least a fair chunk of that spending is on the single pension and more people getting unemployment benefits, would you like to make the case that expenditure on one or both is excessive?
Whoopeee! I rather like it. The relief that disabled people are no longer being treated like scum the way they were under Howard, is ovetrwhelming. And we get a pension rise, something Johnny would never have given us. Haven’t had a chance to get out and test the opinions of my friends who are about ten years younger than me about the increased age limit on the pension, but I might hear something tonight.
Will be interesting to watch the change in rhetoric about pensioners as more non-Liberal voting Whitlam remembering baby boomers reach pension age. 67, eh. Well, as someone pointed out out to marion its years away, and a lot of early boomers (the ones who survived the 60s/70s)will be on the pension before then.
Picturing Joe Hockey…
I’ll defer mostly to Terje as he knows his economics. Even Ross Gittins says this is a mess. Expect a Whitlam like dismissal in the near future me thinks when the Libs block supply.
Terje, It’s interesting that by 2011-12 the forecasts have revenue well above the boom levels and yet in chart 2 here:
http://www.finance.gov.au/publications/commonwealth-budget/2009-10/2009-10/content/bp1/html/bp1_bst5-03.htm
it says there will be a little over $45b less in tax receipts than what could have been expected in the 08-09 budget. It strikes me that the graph i linked to is a little misleading in that the top line should be sloping up so that we can see that the fall in receipts is only relative to what would have been solid growth if it wasn’t for the recession. i.e. the the fall in receipts is relative to previously projected growth; Have i got that about right?
Robert,
The numbers shown in table c1 of the budget may be nominal. However revenue in 2009-10 is still higher than 2006-07 and three years of inflation hardly ulters the reality of the situation by a whole lot.
I have the tables shown at: http://blog.libertarian.org.au if you care to look.
And remember these are revenue figures. Spending 2006-07 was lower than revenue (ie a budget surplus). So spending 2009-10 could still be increased without going into the red. I’m not pathologically opposed to debt but the spin that this debt is unavoidable is just silly. If jobs are important we ought to looking at low hanging fruit such as axing state payroll taxes.
The debt is certainly a non issue. At it’s peak, $9000 per person. The average family of four has a mortgage of $300,000. That’s $75,000 per person, and no one says that is irresponsible or unsustainable.
The Libs aren’t going to block supply. The electorate wouldn’t stand for it. Nobody out here in voter-land wants to go through another constitutional crisis, whatever their politics.Most pewople think, so far, Labor is doing the right thing. If anything they’re likely to be criticised for not being tough enough on middle class welfare.
And if Malcolm (or whoever succeeds him)was so stupid as to block supply, thus bringing the public service to a grinding halt and making the country ungovernable,Rudd would win in such a landslide in both houses the Libs would be catshit for decades. (Well, they are catshit but that’s beside the point.)
“… revenue in 2008-09 and 2009-10 will still be higher than 2006-07 which was an historic high at the time. So Rudd pulls in more revenue in the worst year than Howard did in any year (and he was pretty good at fleecing us).”
Terje – you neglect to mention 2007-2008 (which I believe was a Howard Costello Budget) which shows revenues about $20 billion higher than forecast for 2009-2010 and about $10 billion higher than in 2010-2011.
And of course the revenue losses referred to in the Budget papers are relative to the forward estimates which is the way they are always estimated in statements of this sort.
“So spending 2009-10 could still be increased without going into the red.” When you take account of the fact that most transfer payments are indexed at least to the CPI (and these account for roughly half of all government spending), then nominal spending increases aren’t particularly relevant. Put another way – Yes, there would be space for some apparently nominal increases if we froze pensions and benefits in real terms (and also froze spending on public servants’ wages and froze spending on health care and education i.e. froze the incomes of doctors, nurses and teachers).
tssk: You have to be kidding. Whitlam was running a scandal-plagued, disorganized government pulling really stupid crap and fighting a war with the entire public service, and was in disastrous poll territory. The Rudd government is in a completely different position.
In any case, which member of the cross-benches is likely to hang with the tories if supply was blocked?
Sam, I’m with you. This country has been merrily living it up on private debt for decades – e.g. “home equity” (as a US blogger put it, using your house as an ATM for consumption) and credit cards. The Howard government boasted about reducing government debt, which gives us more bang for our buck – infrastructure, schools, hospitals, transport, lower interest rates – while allowing the debt bubble to continue unchecked.
Lest we forget, the GFC which is contributing to the budget deficit started with a property / mortgage (private) bubble!
Paul @ 28. As the gov has the Rep numbers to pass the budget, to what extent can the Senate actually defeat (as opposed to delay) it? Unlike Whitlam’s gov in 1975, the national accounts are not so deeply in deficit that Rudd government has no other supply options. It will also, unless the alchopops legislation is passed, have a DD trigger. Also unlike Whitlam’s government in late 1975, it is not “on the nose” with voters.
Is Malcolm’s Mob (& Fielding) really ready to face an electorate in Oct/Nov this year (tho I’m sure the L-NP will ensure the gov doesn’t get it’s DD trigger) after denying single pensioners and carers their rises? Aspirant home owners, builders, estate agents, banks, their share of the first home owner’s grant for another few months? The travelling public (not to mention the families of those maimed or killed, or vehicles damaged on the notorious “black spots” due for removal) their infrastructure programmes, those who involved in building homes, infrastructure programmes their jobs?
How many people/ families have a taxable income high enough to be nett benefit losers from this Budget? Enough to reverse Rudd’s honeymoon with the electorate & vote in the Party of Workchoces during a recession?
The ‘collapse’ in govt revenues happened while there was a big cushion in place for mining income, namely the weak AUD and high contract prices. The AUD is now just 20% below its 98c peak, and mineral contracts ~40% lower than last year will be signed soon. What happens to govt revenues then?
If you want hard evidence that the GFC hasn’t really hurt Australia’s miners yet, look at the trade numbers. A string of surpluses that “surprised the market”. Not that surprising when you consider the AUD averaged 65c over the October-March period and miners were still getting boom prices on contracts.
Its gotta end soon, and when it does, mining income and govt revenues will disappear into a black hole. But hey, everyone’s forecasting a mild recession in Oz and a V-shaped recovery, so we’ll be right … maaaate.
Marlon, you can relax over the higher retirement age. It doesn’t kick in for 10 years, by which time you’ll be safely retired.
BTW As far as Big Kev signing his own death warrant with this [pensionable age 67], that’d require the opposition to offer an alternative that could actually deliver the death blow James Russell @ 13.
Just remembered: Didn’t Howard & Costello want worker “retirement at 67″? I’m sure I remember many on-line comments on this.
Rudd and Swan’s assumption that we will return to surplus is based on treasury predictions of growth returning to approx 4%. Plus inflation this is approx 6%. These are boom time growth figures. Hands up anyone who believes that we will return to boom economic times in the next couple of years. The other thing is that they have said that they will reign government expenditure growth to 2% pa until the budget is back into surplus. No government has been able to do this for 50 odd years, and considering we will have an election before then!!!.
A 1975-style dismissal of a majority Governement from blocked supply is *never* going to happen again. It only worked in 1975 because of surprise and because the Government leaders in 1975 couldn’t share information quickly enough. If Whitlam had been able to get on his mobile phone and tell the Leaders in the Senate to delay passage, and get the Leaders in the House to rescind the motions passing supply, Fraser would have been stalemated.
d
Woops! PM cites Standard & Poor’s verdict to fend off budget criticism
Doesn’t make the Opposition’s spin any easier to sell!
BTW: Channel 10 mid-morning news was claiming that this was the biggest deficit in Australian history. Not if you adjust the figure for inflation, it isn’t! The honest statement is “In dollar terms, but not those (inc wartime budgets) adjusted for inflation, this …” Indeed, if the deficit stays under $58 billion and is adjusted for inflation, it will, at worst, be not much higher than Howard’s (August) 1982 Budget was by the day John Stone briefed the incoming PM Hawke on its $9+ billion deficit.
So much for MSM (& Liberal) honesty!
“We believe the deficits and associated borrowings do not alter the sound profile of the country’s public finances,” Standard & Poor’s said …
The stockmarkets do. At least they do this month.
The ratings agencies have not exactly covered themselves in glory in recent years, what with them giving AAA ratings to worthless CDOs and so on, so it’s a bit rich to be appealing to them as an authority on the soundness of the budget.
Frankly, I’m mightily disappointed in this budget.
However, that is as nothing compared to how fed up I am with the prevailing commentary about a budget deficit being somehow evil. Statements about ‘burdening our children with debt’ are absolute nonsense.
Frankly, I think the deficit should have been twice as big with some real money allocated to infrastructure building. $22B for infrastructure? Pathetic! Let’s have $100B invested in the development of renewable energy generation plants and a proper smart grid over the next 3 years, and see what happens to the unemployment rate. It would hit rock bottom, that’s what. If we can’t rely on China to buy our mineral exports, why not use them to build infrastructure here?
Bill Mitchell’s got it right.
40 carbonsink – I’d take a different view on themarkets expecting a return to boom times. The rally we have had since 10 march has certainly been suprising. You need to look at it in context of the previous fall as well as future expectations. At this point in time the market is worth 57.4% of it’s highest point – that is 42.6% lower than the high.
Hardly an indication of a return to the heady boom years.
To continue – we are where we were in December 2004 – the last 4 and half years of added market value are gone.
A short term ago we were at 2003 levels. Be thankful for small mercies.
Someone’s talking sense:
Kenneth Davidson at The Age.
Now if only more ‘commentators’ caught on.
Sam 45 – In fact the lows in March 2009 were first reached as highs in April 1999 – a decade of new value had been wiped off.
The Right has no alternative.
That is because whenever one faction of the Right offers an alternative it discovers that its political allies on the Right are its deadly economic enemies.
For better or for worse, there is no viable alternative to Ruddism.
Well said. Why is it that public debate on just about any issue in this country defaults to the lowest common denominator? Forget nuance, context, detail or anything which may detract from glib ‘analysis’ and fear inducing one-liners.
Andos – Davidson is in lala land. Using his logic, we would probably nothave been debt free last year and therefor enot had the ability to do what is being done now, however incompetent it may be.
Razor 47. 1999 was near the the peak of the dotcom bubble and March 2009 was maybe the trough of the GFC crash. It’s a silly comparison. You can’t expect the sharemarket never to have any downs.
If you want continuous ups, albeit at a very slow clip, put all your money in cash all the time. But you know perfectly well that that is a dumb strategy.
Razor: seriously, you can’t keep running the “Howard and Costello made us debt free – hurrah!” trollop, mate.
It’s nonsensical, blatantly false, and has no bearing whatsoever on the Government’s response to the global downturn.
By contrast, if the Howard governments actually spent money on infrastructure and job creation, we could be leaps and bounds ahead of where we are now as a nation.
By the way, you wanted some evidence that “as govt reduced spending, household spending had to rise to fill the gap”? Well, let’s have a look at household debt.
“Based on information from the Reserve Bank of Australia, over the last 18 years the total amount of debt owed by Australian households rose almost six-fold.” From the ABS.
So, clearly, none of us were debt free last year. Nor would we have been if we could have chosen. Debt is the means of investing in our future. However, you and I can’t borrow money to build a new road to our house, or a national broadband network. The Government can, and should, borrow all the time to invest in sustainable employment and economic growth.
Razor, it’s not “clever”, it’s just the facts.
1995 debts as percentage of GDP
Federal 15%; Household 40%; Net foreign 50%; total 95%
2007 debts as percentage of GDP
Federal 0%; Household 100%; Net foreign 65%; total 165%
Those are the facts, public and easily discoverable by five minutes with google. So in fact I was wrong in saying that the debt was “just shuffled around”; overall it’s increased.
We can have private debt, or public debt, but either way we have debt. The only question is whether our debt money is well or badly-spent. I can borrow $200,000 to build a house for my family, or $200,000 to blow on the pokies. Debt is always a bad thing, but the real issue is whether you have anything to show for it afterwards.
$14 billion for Aussies to buy iPods and pizza is not a good spending of money, I would say; even one-tenth the same amount on renewables would be better. Hell, I think cars suck and should be abolished, but even $14 billion on roads would be better – at least we have the roads afterwards, and the building of them would employ lots of people.
Edit: and I should have said “low” foreign debt, not “no”. That’s what I get for posting late at night while I’m tired and my woman is talking to me at the same time
But the figures in #48 are roughly right.
Shortly after the change of government, Costello’s old department, Treasury, released a paper that found “excluding GST payments to the states and territories, real government spending has grown faster in the period from 2004-05 to 2007-08 than in any other four-year period since the 1990s recession”.
What was that you were saying about government reducing spending, Kaishu??
Yeah, but most of that government spending was the money Howard and Costello kept shovelling into the pockets of the well-off, Razor. (I shouldn’t complain, being one of the lucky recipients of a fair chunk of govt largesse, but it offended my sense of fairness.)
Next time you lift quotes verbatim off a website, Razor, you should attribute it.
Christian Kerr would be ropable if you didn’t at least send some readers his way.
Andos – I’m not writing an academic essay and I did include the quote marks.
No you didn’t, you just cut and pasted a whole paragraph from his blog post verbatim.
It’s ok, Razor, I’m sure you’ll do better next time.
thats right Kiashu – the Howard years didn reduce debt so much as transfer it to totally non-productive areas.
Owning a house is great, etc, but it does basically ef-all for the economy.
Whereas some forms of public debt (eg that spent on infrastrucuture) can be a productivity measure over time.
Just another of the many ways in which Howard & Costello were economically overrated.
This is not correct. The provision of housing is a service industry just like any other. The fact that most people own the houses they live in makes no difference, other than owner-occupied housing being preferentially taxed.
LeftyE @ 60 – I think its entirely possible that we could have ended up with high government and private debt. You don’t have to look far to see other countries which have ended up in that situation after the boom.
A lot of households got into debt because they discovered their houses were giant ATMs. And loan products like line of credits made it very easy for people without sufficent self-discipline to not to pay down their home loans.
Not being an economist I can only interpret this from the average, reasonably informed leftist voter’s point of view. Ross Gittens seemed puzzled last night on quite how to define it, certainly not a mess, Patrickg, good in parts perhaps and “sneaky” too, though he joined the chorus of “where are the tough decisions?” This knee jerk reaction seems to be what the government was hoping for, and themselves orchestrated. Meantime they have slipped in that major long term change to the pension and others to super, health insurance, family tax benefits etc.
The general mood of the commentariat seems to be that Swann has chickened out on the tough stuff. My take is that they felt this was not the time for too much tightening on fiscal policy since they have to borrow to maintain expansion anyway. A propos the projected growth bounce of 4.5% – isn’t that coming off a much lower recessionary rate after the contraction caused by the GFC? Swann did remind us that past recessions have been followed by much bigger bounces and that Treasury projections for this one are deliberately conservative, since we are in “uncharted waters!”
I think they are shaping public opinion and manipulating Opposition dumb negativity very well. The indignation about this budget being too soft should make the transition to changes in the taxation system after the Henry review comes in a lot easier.
Re Marlon’s ill informed or perhaps confected outrage on the pension change, most of the people I know on the pension, and there are many, seem to juggle the hours they can work without penalty, or regretfully turn down jobs they could well enjoy because they fear losing eligibility. Cases of genuine incapacity to work beyond 65 will find a pretty good medical benefits safety net in place in ten years time, I’m sure.
Notice Ken Henry wasn’t complaining and that Bob Brown wanted more for alternative green energy but I bet he understands this budget really well and will trade off to get some of what he wants while supporting this debt level we have to have.
Bob Brown is as predictable as an atomic clock. He would say the Budget wasn’t green enough even if he delivered it himself. It’s all theatre.
Well, my own view is Howard/ Costello did a lot of things whcih created a bubble in the housing sector (CGT concession vis a vis other investments, grants) – which , again in my view – is a comparatively unproductive use of debt – in the sense of not offering multiplier effects on national output. Comapred to say, roads, transport infrasctucture and the like.
And as has been noted, it wasnt government debt that prompted the GFC folks!
A few important points (not necessarily in order of importance):
1 – Of course government debt did not cause the GFC. However, in those countries where public finances were in reasonably good shape before the crisis hit, governments have had more room to loosen fiscal policy. Although I would rather the previous government had invested more in productive public infrastructure rather than pissing much of the temporary revenue boom on tax cuts and middle class welfare, we should at least be pleased that we weren’t running large budget deficits in the lead up to the crisis. If we had, we would almost certainly be in the position of many European countries facing credit ratings downgrades and a higher cost of sovereign debt.
2 – The opposition’s response to the budget again demonstrates how much trouble they are in. I couldn’t believe it when Hockey was talking about this being Australia’s largest budget deficit, while failing to scale the deficit by nominal GDP. It just makes him look ridiculous.
3 – IMHO, the growth projections in the budget are very optimistic. The trick the government is pulling is similar to that of the US and UK governments. They are assuming that there will be fairly rapid catchup to previous trend growth. The problem with that assumption is that the record of recessions associated with financial crises is that they are associated with relatively weak recoveries and countries tend not to return to the previous trend. While it is true that Australia hasn’t really had a financial crisis, many other countries have, and Australia’s spectacular economic performance in the earlier part of this decade was heavily dependent on external factors. The risks to the revenue projections in the budget are certainly on the downside.
4 – The pattern of infrastructure spending announced gives cause for concern. Although on its face it seems sensible that the government has said no to state government proposals that were not properly thought through, the fact that our largest and most congested state will get such a small boost suggests that growth there is likely to be constrained for many years. NSW public finances are in horrible shape and unless the feds fill in the gap in some way, NSW relative performance is likely to continue to decline.
5 – As I said in another post, the combination of increasing the medicare surcharge and means testing the private health insurance rebate should be thought of as a revenue raising measure, rather than a comprehensive plan to reorient Australia’s health system away from private and toward public.
6 – I like the increase in the age eligibility for the old aged pension, but I over time, I think it should be lifted further, to say 70.
7 – Because I am more pessimistic about Australia’s longer run economic performance, and because Australia already faces a longer term fiscal gap associated with the demographic bulge, it is almost certainly the case that future governments will have to substantially raise taxes – perhaps by 5% of GDP or more. That is large and will be very difficult to do with income taxes. Although this probably wasn’t the budget to be tackling such longer term problems, I predict that within 10 years the GST rate will have increased to 15%.
8 – I’m not at all surprised that the FHOG was extended by 6 months. The government will be very concerned that the FHOG has simply brought forward a lot of activity, and that when it is removed, there will a quarter or two of very little residential investment. I still think the higher FHOG for existing dwellings was a bad idea.
9 – The scale of “green spending” is very small and unlikely to do much to help the transition to a low carbon economy. That is not particulary surprising as the government has already signalled through the design of the ETS that it doesn’t take its own rhetoric that seriously.
10 – The general discussion of debt on this forum is too simplistic. The accumulation of debt can only be evaluated in the context of whether the debt has been used to invest in assets and activities that will generated a postive stream of future net-benefits. Australia is a low public debt country, but a very high private debt country. Australia’s high net foreign liabilities do present longer term risks. But historically, foreigners have been prepared to fund our large current account deficits because the return on holding Australian assets has made it worthwhile. As for public debt, there is no problem with governments borrowing to invest in public goods that can positively contribute to future productivity growth. The problem comes when, like in many European countries, government borrowing is taking place to simply cover ongoing government consumption. Think of a household analogy. It makes no sense to wait to buy a house until you have saved all of the money for it. You save some money, and borrow the rest and pay out of future income. Debt to purchase an asset that will deliver a future stream of benefits (in this case housing services) is a good thing (setting aside housing bubbles). But it also makes little sense to run up debt in the long-term to finance ongoing consumption, unless you know that your future income will be considerably higher than your current income. Debt cannot just be thought of in a static sense. It has to be thought about dynamically and in the context of the sustainability of the overall balance sheet (household, government or firm).
I agree that public debt is not the evil it’s portrayed to be by the Liberals and can be appropriate if it’s used towards creating better infrastructure or services for Australia, but I’m a little confused by people blaming rising household debt on the former government.
What public services did Howard privatise or cut funding to that led to Holly Housewife having to max out the family credit card to compensate for? I’d be sincerely interested to see what commenters on here would suggest the government is in a position to do to minimise household debt without excessive interference into the finances of citizens.
A late contribution to the budget discussions. After watching Question Time today (very enjoyable I must say for most of the time I watched, with Kevin Rudd and Wayne Swan performing excellently and to my great amustment)pondering the implications of Malcolm’s impending retirement, I sought the website of The Great Pretender referred to in Question Time. GUESS WHO!!!! Google of course produced a number of references for Peter Costello but with great prescience my anti-virus program warned me against the site. The page weighting gave the official site of PC as “Untested: Peter Costello, M.P”rating. Not far from the rating the majority of people have given Peter.
“The general discussion of debt on this forum is too simplistic.”
.
Only debt? You must be a kind and generous even tolerant and forgiving type LO. What odds are you offering for an early election?
I reckon we are odds on….you?
Well, if they are to pull one on, an early election, it’s going to be interesting to see how they reframe what Wayne Swan said yesterday at the Press Club. It caught my attention because it was something straightforward coming from one of the slimiest of a very slimey lot. The Wall Street Journal picked up on it too, so, unusually, we have what got said at the Press Club on the referencable public record: ( NPC transcripts cost $330 to non-club members, quite a nice little earner)
How long is a moment?
I wish someone would put up a transcription of him weasling out of the accusation that he’d screwed the single mums and other under/unemployed. It was a meisterwork of disingenuousness, not at all like “Hey, we’re using them as an excuse to line the pockets of the firms we gave the job network contracts to, and the pseudo education and training providers, and keep them onside… would you prefer we gave the actual unemployed some real money themselves or something?”. That’s not actually what he said, but it’s what I heard, which is why I wish transcripts were available.
Contra LO @ 66, I think it is useful to reduce the debt ogre to very simple terms. If you do it goes away.
Lindsay Tanner said the other night that debt servicing in the budget would peak at $7bn. Revenue in the this budget is expected to be $290.6bn. So when debt servicing maxes in a few years time it will be 2.4% of this year’s revenues.
Since the Opposition is fond of domestic analogies you might compare that with a typical mortgage which takes 25% or more of income.
Malcolm huffed and puffed about it tonight and came up with the strategy of swapping an increased tax on cigs for the changes to the private health insurance rebate. What seems to want to die in a ditch over is this. For singles earning $75,000 to $90,000 the rebate will be 20%. For those earning $90,000 to $120,000 the rebate will be 10%. Beyond that nothing. Double for families. People earning less than $75k for singles and $150k for families are unaffected.
That will save $1.9bn. Trivial in the context of the budget outlays of $338.2bn. Turnbull’s proposal will shift the pain from the well-off to the poor.
The ABC guy said at the end, the ball is now in Rudd’s court. I thought Turnbull hit the ball into the net.
I think that regularly increasing the tax on cigarettes is a good idea regardless – people do actually give up smoking due to price. And it gets the government money in the short term and the long term through less health expenditure.
Chris, it’s a revenue measure rather than a health measure. Obviously nicotine is highly addictive and it’s difficult to quit. There is a problem, I think, in that the most strongly addicted will continue to pay, and many of those will be among the less well-off. In that population money for cigs can compete with food for the kids or money for health care.
By contrast, those affected by the the health insurance rebate have discretion about how they spend their marginal dollars. It matters little to their general well-being.
To put the debt issue into some kind of perspective, last Friday I attended a seminar presentation by visiting US political scientist Thomas Mann at which he expressed his bemusement and amusement that Australians were getting worked up over a level of debt as a proportion of GDP which was so piddling by US standards.
On the question of the failure to increase income support for single parents and the unemployed, and Swan et al pointing to training, jobsearch, etc., programs to get people “job-ready” and into work, at some point something has to be said and written about how living on a seriously inadequate fixed income for an extended period of time fundamentally undermines a person’s employability through its effects on their physical and mental health, amongst other things.
Brian @ 75 – I disagree. In the current context it looks like a revenue measure (well really its a political stunt), but long term it really is a health measure. Who doesn’t know people who over the years have given up the smokes because of the steadily increasing cost?
I agree its highly addictive and very hard to quit but you can also push more money into helping people quit. The long term health benefits are pretty clear to see both for those who smoke and those who get stuck near them while their smoking.
I’ll admit to quite a bit of bias here given I’m quite allergic to cigarette smoke.
Let me get this straight. Her majesty”s opposition complain incessantly about the size of the budget defecit so theat we all have something else to worry about. When their turn comes to spell out what they would do, their only alternative is to propose a tax increase to balance out the means testing of the HIR.
This is the same mob who also complained long and hard about the ‘alcopops’ tax increase.
In a sane world they would be labelled insane, if you know what I mean.
Chris, I had a 15 a day habit which I tried to kick in my 30s. I gave up many times and always failed in the end, until I decided to share my life with a woman who was like you highly allergic to cigarette smoke. Up to 10 years later I had urges in situations where before if I’d been offered a ciggy I would have taken it. I take no credit for succeeding in quiting the habit. My motivation was pure, raw fear! Even now I sometimes dream about smoking – always a pipe, which were common in the 70s. I had about 3 good ones, each with a different flavour.
I accept that people will give up for economic reasons. But my contention is that that particular line has been pushed about as far as it is reasonable to go as a public policy. There are lung surgeons who smoke. Smoking is highly resistant to rational decision making, or even highly negative life experiences. Pushing it further is not going to shift hard core addicts and it’s at a point where I suspect making cigs more expensive will do more harm than good.
adrian, quite so, which is why I reckon he didn’t get the ball over the net. The commentariat on ABC radio this morning reckoned he gave a mighty fine speech, but one that was addressed to the people behind him. They may well have been right. Rudd and Swan struggled to stay awake, such was the fear that he struck into their hearts!
What’s all this criticism of the great sage, Malcolm? He’s trying to get my health rebate back. But he’s done more than perhaps even he realises. He’s laid out a blueprint for abolishing income tax, company tax, payroll tax, everything. Just charge a few more cents on each cigarette. Result: better health, happier taxpayers – what’s not to like?
Jenny, given the espoused purpose of putting extra taxes on smoking, if the policy succeeds we’ll pay no tax at all. Brilliant!
Brian @ 79:
I don’t think we’re there yet and we still have people taking up the habit. Smokers do say that they will try to quit if prices increase significantly. I think we should have a long term plan to regularly increase tobacco prices (in conjunction with extra help for people to quit).
Chris, get over it, Liberals do not give a stuff about the health costs of ciggy smoking. They still take donations from smoke companies for gods sake.
I listened to Lindsay Tanner this morning and he basically suggested an increase on the smokes tax has been deferred until after the Henry review results.
My feeling is that this budget has been ‘the pre-election option’ special. There was nothing to scare the horses apart from the clodhoppers in the Liberal Party who are likely to pass the Alcopops tax, this time, because they are scared shitless of an election.
Malcy plans to block a means test on the health rebate to show he has a bit of power and buy himself three months grace before deciding whether its worth providing a dd trigger, then.
The “savage”-unnecessary in terms of claimed economic ruination- budget that the media managers wanted will not eventuate until after the next election in my opinion.
Sorry to derail, but I just have to point out, Patricia WA, I was quoting Tssssk there. I don’t actually think it’s a mess.
joe2 @ 84 – I’ve no doubt its a political stunt, but if a health measure sneaks in under the guise of a political stunt I have no problems with that. It’ll be interesting to see what the cross benches in the senate have to say about it. Would they vote against a cigarette tax increase? It’ll be in their hands not the oppositions.
joe2 @ 85 – they’re deferring any decisions they don’t want to make to reviews to be delivered in the future where small measures like this will get lost in the noise. Unless there is a an early election the next budget won’t be harsh – too close to the election for anything vaguely unpopular.
joe2 @ 85, I think your reading of things is about right.
I was initially critical of Rudd/Swan for not reeling in more middle-class welfare, but they need the spending to go on. For the sake of confidence and economic recovery.
Costello has been responsible for some amazing rubbish in the name of serious comment over the years, and did not disappoint. He said that if the economy is going to recover so well then why the debt? To enable the economy to recover so well, stupid!
I understand he was sitting up the back next day, as usual, with the budget open in front of him and tapping away on a calculator. Probably working out the value of his share portfolio. Poser!
Chris, people’s stated intentions re giving up smoking mean almost nothing.
I’ve given up smoking five times. I have found that going on the patches has stopped the physical addiction, but not the psychological one. After about half a day not smoking,(sometimes less) I don’t have to have a cigarette, ie I don’t have a physical craving. But the psychological one is still there – and mostly its have something to do with ones hands.Most of my fags burn away unsmoked in the ash-tray. I have cut down to about 100 – 150 cigarettes a fortnight. I used to smoke up to 80 a day.
The pernicious thing about Viscount Turnbull’s suggestion is not the health asspect – I approve of that – but rather he wants to keep the Medicare rebate for the well off and have the less well off, who are nowadays the majority of smokers, bear the cost of the budget shortfall. As I said on another thread, where I inadvertently posted a similar comment, typical of the Liberals with their philosophy of tax the poor, but whatever you do, make sure you cut taxes and similar imposts on the rich.
Thats it Paul.
Pulling money off the largely poor addicted smokers, while pretending they care about their health, so that the rich can save themselves the time of pulling out a few extra bucks from their fat wallets to pay for their health care choices.
If anyone really gave a stuff about smokers they would be calling for an end to the dangerous additives in the silly things. Pesticide free and non toxic paper would help as well.
I should also add that when I go into hospital, usually two weeks at a stretch about twice a year, I can’t smoke, of course, and I don’t need patches.
Thats the thing, Paul. When we are in bed we have something to do with our hands.
Brian @ 74 reminds me of a childhood where there was not enough food, coal for the fire or shoes for us kids and my poor dear Mum would still rummage around every nook and cranny for the odd coin to send us “up the top” for a paper packet of five fags. I can even recall one heartbreaking time she “stole” my hard earned blackberry money, pennies I thought I’d hidden so cunningly under my bed.
Hindsight tells one how addictive those unfiltered raw Woodbines were and how hard life was for a battling single mother of five in the “40′s who somehow managed to keep her kids from starving. I know she felt rotten about it at the time and would talk about it being her last “pleasure in life.” It didn’t stop us from resenting it and doing sums and making up lists endlessly of all the things we could have if she would only stop smoking. I don’t think we once mentioned her health, and she had a terrible smoker’s cough!
What judgemental little pricks we were! I struggle with a coffee habit and I can’t imagine the heroic effort (or level of desperation) which enables drug addicts to go cold turkey. Smoking, like beer, remains premoninantly an addiction of the poor and helps some people to keep on keeping on.
Anyway what does this have to do with patronising Lord Turnbull expecting poor, pariah smokers to subsidise the health insurance rebates of the rich! Perhaps Labour will call his bluff, accept the trade-off for now, get the Budget through the Senate and fix up the Health Rebate issue next time around. And how will the Coalition now make a case for their stand on Alcopops?
Patricia WA, my point is that similar circumstances are almost certainly quite widespread in Australia today. I don’t have an easy reference anymore to median income statistics, but I’d be surprised if it’s much more than $40,000pa. I think as a household there is a band that you get into around $30-$40k where, because of social security transfers, you don’t shift out of it easily by earning more because the benefits drop off at almost the same rate. If you are a single earner supporting a partner and three kids, then you’d be scraping to provide food, shelter, clothing, health services, education, a bit of leisure and reasonable opportunities in life.
By googling I found this information for Brits. Scroll down to the 2006 wages section and you’ll find the bottom for categories, about 40% earning below $31,200.
These are the people whose pockets Turnbull wants to raid.
joe2 @ 93 – you’ve got a great start to a new Quit campaign
Patricia @ 94 -
Until it kills them. And it not only effects them, but people around them. If you want to help close the health outcome gap between socioeconomic groups reducing smoking is one of the best ways. And research shows that price increases are the most effective way of reducing smoking rates – its not just people who already smoke that you need to consider, but those who are potentially taking it up.
Also Rudd could just add both measures (reduction in private health rebate and tax increase on cigarettes) into the budget and say the extra money is needed to help reduce the deficit.
Yes, Chris, my healthy living, doctor averse and rational self agrees with you, and I am sure Brian does too! But that patronising “we know what’s best for you” attitude does get up my nose, particularly in this context of Turnbull thinking he’s on a winner with “let’s save private health insurance subsidies by getting those unhealthy smokers to contribute more to the national budget – after all they are so unhealthy and expensive!”
An interesting comment from a specialist in the Oz “Jack the Insider” blog today said that Dutch research suggested smokers aren’t that much of a burden….”Smoking related illnesses cost money but they also save money through shorter life expectancies and reduced aged care costs. Holland did the maths and considered smoking a financial positive and their tax take on fags is less than ours.”
I imagine other factors were cited, after all smoking does reduce libido and life without lots of love and sex might make one want to turn one’s back to the wall rather sooner.
Sorry – mixed metaphor there. One “turns to the wall” when deciding to die, I think! And one has one’s “back to the wall” when up against it. I guess a heavy smoking, low income, emphysemic who develops lung cancer on top of depressive illness after a decade or so of exclusion from cinemas, restaurants, clubs and now pubs wouldn’t have much reason for living anyway. So understandably Mr. Turnbull and friends prefer to support the healthy, the wealthy and the wise! A much better investment of the national capital!
Brian interesting comments about Costello@88. Now that he has confirmed he will stand for Higgins it is just a matter of time for Turnbull. Mal must feel like he is being stalked . It wouldn’t make it easy to come up with good ideas under those circumstances which probably explains why everything he comes up with seems half baked and strategically quite foolish.
As for Costello being a “poser”, have you seen his impression of Con the Fruiterer with the carefully placed “reliable” in the background?
http://www.petercostello.com.au/gallery
Good one, joe2!
I’d like to see the smokimg thing addressed as a separate issue and decided on its own merits.
On the private health insurance debate, given we live in an imperfect world I’m not unhappy with the rebate, but always thought it should have been means tested. We’ve always been insured to the max, and since I had a triple bypass in 2000 when I was 60 we have been net beneficiaries every year. Because of the particular circumstances of my case at that time I think there was a fair chance I would have died on the waiting list without the private hospital option.
In principle I think your health care should not depend on your wealth or income, but since we don’t live in a society that strongly believes in that principle, I’m grateful of another option.
Brian @ 101 -
It’d be great to see, but out of the context of a budget I don’t think it would get much attention at all. Apparently the tax hasn’t changed in real terms for the last decade or so.
Is there any society out there that at some point doesn’t say “sorry, too expensive for us to pay for given the probability of success?”.
Yeah, who exactly ARE these whingers who earn over 120k and want us to pay their feckin “private” health insurance? FFS!
Look at what we’ve become. Thankfully someone scaling that rubbish back. Pity that zero-mandate idiot Fielding has a randomly-generated say in the matter.
It is going to be monumentally tedious the next political election cycle – all this welter about debt – nobody understands the mechanics of it- but Turnbullshit will hammer it and hammer it. Until ppl will vote Liberal just to shut him the fuck up.
It proves me right rather than those (here esp) who didn’t understand why Turnbull voted against the stimulus pkgs etc.
Ignorant but vote-persuasive jabber about debt is all we are going to hear about from now until kingdom bloody come. And there is nowt the ALP can do about it.
You reckon, wbb? Latest Morgan has ALP up. I don’t think people are that daft. Turnbull’s problem is that cant articulate what he’d actually do instead.
Laurie Oakes supports wbb’s position in his column this morning. He reckons that if Rudd’s debt strategy is successful in giving us a shallow recession and an easy landing it will look as though it wasn’t necessary.
It’s in line with what Cossie said (see my comment @ 88).
Oakes says that Turnbull airbrushed out the GFC in his reply to try to make it look like normal Labor mismanagement.
“And there is nowt the ALP can do about it.”
Tis true that most of the media also keep banging on about it, as well. This cash handout being a ‘money waster’ is run over and over, despite inconvenient information coming in, constantly, to the contrary.
I still wonder, though, how folks take to being told that they are money squanderers. Most of us like to think we are pretty savy with our bucks and don’t take kindly to being preached at, by idiots with money coming out of their ears, about what we would do with a small windfall.
Labor also has a great weapon in the calm talking, clear thinking, Lindsay Tanner who has the ability to cut through the crap better than anyone else. They should let him loose more often to let down the tyres of the debt truck.
Yeah joe2 – the libs are completely outgunned in terms of calm, persuasive leadership. Im confident they will lose this debate over the long haul.
Economists actually blame the former govt for squandering boom times, and putting a revenue timebomb in the system – cutting taxes under cover of boomtime corporate revenues which always going to go bust, sooner or later.
In any case – its now clear to punters interests rates will always be lower under the ALP.
Dont forget to factor that in. People who dont lost their jobs will rarely have been better off.
And now Malcolm, undoubtedly inadvertently, has blurted out the truth about Liberal policy on universal health care. He wants to abolish it. I can just see the Labor election ads now. ‘Malcolm Turnbull says “In an ideal world everybody would be on private health insurance.”
btw, Ratty is back, pushing to make himself relevant on Sky TV. Michelle Grattan has a report in the Age, but, on the principle of starving the little turd of oxygen, I’m not going to link to it. Somebody else can, if you think its worth it. (I don’t. Same old lies and bullshit.)
If the opinion polls are still showing ALP ahead then isn’t it obvious their strategy of calm persistence of which Lindsay Tanner is the epitome is working?
I can understand the media’s mocking of the constant re-iteration of the term “temporary” attached to “deficit”, but I think it’s getting through out in voter land. Frontline troops have obviously been well trained on this, but surely they need to be drilled in responding to the Coalition “Labour debt” hysteria as if the deficit exists in a vacuum by always mentioning the GFC and the sudden loss of national revenue. Too often they let this pass as if it’s a given and doesn’t need mentioning, but it does of course as often, if not more so, than the temporary nature of the deficit. Lindsay Tanner is always careful to frame his responses within the context of the global downturn and the revenue shortfall. Added to which, of course, he is always his lucid and commonsense self. What an asset he is.
I was just japing before, but Im serious about this: if Talcum wants to pretend that the deficit is nothing to do with the GFC, and everything to do with economic management – then Rudd should do the same on interest rates.
SO MUCH LOWER UNDER LABOR. LIBS = HI INTEREST RATES.
Rinse and repeat.
You like the sound of that Talcum? Might look good on a truck! After all, its true. Look at the numbers!
Two can play that game.
SO MUCH LOWER UNDER LABOR. LIBS = HI INTEREST RATES.
Exactly. That’s the type of game you have to play.
ALP might still be ahead in the polls now – but the endless repetition of Labor’s Debt has just started. In another 18 months it’ll be working its magic on the Great Aussie Voter.
If the GFC dissipates ppl will in due season have zero memory of why we have a debt. If unemployment seriously bites, Labor will be saddled with Debt and a tanked economy. Any alleviation due to the debt spend will be invisible.
Strong opposition equals opportunistic opposition unfortunately.
Lefty E, i think one of the fortunate things about the GFC is it illustrates just how complex economic policy is. The fact that interest rates are plummeting to cope with an epic Fail moment, combined with the lesson from the last election vis a vis interest rates and inflation, provides a clear lesson that a line as simple as “we are the best because we keep interest rates low” is obviously full of shit.
IMHO Lindsay Tanner comes across as so credible precisely because he is willing to explain complex issues and treat voters like adults.
Agree TWM – Tanner is brilliant at explaining complex issues honestly, and simply. Not QUITE as good as Keating – who is the master. But close.
@114 applies to parliamentary performance/rubbishing the opposition too i suspect, although i am too young to have caught Keating in his prime (thank god for youtube and the musical.)
Wife adamant that Tanner must ditch the comb-over if his message is to be truly effective.
“Wife adamant that Tanner must ditch the comb-over if his message is to be truly effective.”
Maybe Julia can get Tim to have a private word with him…”maaaaattttte……”
Robert Merkel says:
I understand and sympathise with Robert’s under-whelmed response to the budget. Rudd-ALP is the most conservative, managerialist federal administration in living memory. Even the govt’s pre-budget’s headline policy – the fiscal stimulus – was a one-off handout, not a fundamental shift in administration of the economy.
The AUS federal budget FY 2009-10 is a remarkably conservative document, given the scale of socio-economic change occurring in other jurisdictions. True the deficit has ballooned out to nearly 5% of GDP, the highest since WWII:
But this deficit is mostly structural caused by previous tax-cutting policies and promises made by both Howard-L/NP and Rudd-ALP. The pre-ordained collapse in tax-revenues is about double the value of new spending initiatives. About one-third of the deficit is generated by traditional public works in “nation building” projects. The ABC covers the basics:
Add the losses in tax revenue ($50b) to the increases public works ($22b) and one gets the ($70b) change in fiscal valency from 2008-09 (surplus #20b) to 2009-10 (deficit $50b). But incremental tax-cutting and public works pork-barelling were classic symptoms of Howard’s brand of fiscal statism. So this budget is Howard-ism on steroids, owing the GFC.
Contrast the conservative AUS budget with the phenomenal latest projections for the US federal budget deficit, estimated to be nearly 13% of GDP:
To be sure, Obama-DEMs were bound to swing much more strongly to the Left on fiscal policy than any other administration, if only because Bush-REPs had swung so far to the Right. But Rudd, in constrast to Obama, does not have any far-reaching policy changes in purview. Obviously dragging the lead on Climate Change. And promising an Education Revolution he has so far delivered the equivalent of a cabinet re-shuffle.
As I predicted Kevin Rudd is turning into the most “c”onservative PM in living memory.
Lets face it, the Left gives Rudd a free-pass because of his different political style, rather than his policy substance, which is more of the same. About what you’d expect from a fashion-conscious ideological cult.
George Megalogenis has a good post up about the structure of the budget and related issues.
Thats actually a useful quantitative summary of whats happened, Jack, ta.
I find political conclusions unpersuasive though: it MAY be easy to see a whole range of actors as “conservative” post-Howard, since Howard was essentially a pragmatist with no solid ideology other than union-hating (his achilles heel, and the cause of his demise) – and redefined conservatism to include massive increases in state expenditure, middle class welfare, dowsizing, upsizing, private health, medicare safety net – whatever it took to get re-elected. Howard’s genius was appearing consistent – while in fact being all over the shop like a mad woman’s poo.
I could list the range of Rudd’s departures from Howard: these include a seriosu re-tilt back to public health through means testing (which he could have baulked at, but hasnt); a state owned broadband network (a massive departure from canberrra led ‘rationalism’); a quiet but actually more profound than any lefty thought liely revolution in asylum policy, and movement (if unsatisfactory to many) on climate issues.
Rudd’s genius is that people like you still think he’s conservative. Rudd would be pleased with that – thats re-election in 2010 right there. But the truth is , “Conservatve” means almost nothing post-Howard.
Retirement age.
As I said up the page it is over for Rudd.
His performance tonight on late line tonight just confirms it.He makes Keating look in control.The union movement of which I am still a member, has started sending out the flyer’s already.They will not let this policy fuck up stand.
I mean it’s all very well if you work in an office where you just may get a hernia picking up a paper clip, but try working a cement mixer at 67.People can’t find work now at 55 much less 65.
Rudd it’s over,every time our side makes an attempt to gain government for a while federally, someone comes along to fuck it up.
“But the truth is , “Conservatve” means almost nothing post-Howard.”
Yup, well to do and socially comfortable western countries are all run by bland centrist technocratic governments these days.
Most of their political squabbles are now either over managerial competence, pointless but fun moral panics or hairsplitting definitions about how to deal with issues beyond their control like climate change, IP and the rise of bandit regions.
Suck it up and enjoy a rare spell of peace and stability in human history.
For us of course. Not for them.
Nabs,
Don’t forget the arguments over hairdryers. I wonder when his highlights will become an issue.
Lefty E says: May 18th, 2009 at 12:14 pm
Lefty E’s basic error lies in his being wedded to the notion that if “you change the government you change the country“. (You know you can kiss progressive dreams goodnight when the PM gets annointed by the Oz.)
I dont have a problem characterising Howard as a “pragmatist…conservative…with no solid ideology”. For most of the decade thats more or less how I had him pegged.
What is to laugh is Lefty E’s fond hopes about Rudd’s progressivism. “Rudd’s genius” is to make people like Lefty E think he’s a Left-liberal. I predicted that the 2020 conference was set up to the “cheap date” Left so that they would be eating out of Rudd’s hand. And, sure enough, Lefty E was gracious enough to oblige.
Lefty E’s shopping list of Rudd’s “bold reforms” only underscores the pathos of the Left.
In fact Rudd has mastered the art of conservative post-modern politics by making a big deal over changes in political style rather than policy substance. He takes the path of least resistance by talking to “the populace’s…Left-leaning political opinions” whilst tacking “to the elites…Right-leaning policy interests“. In the age of spin-doctored me-tooism we are all conservatives now.
The most basic political reason for major party conservatism is that neither the L/NP or ALP want to risk rocking a boat thats sailing smoothly. As Sheehan pointed out, neither Rudd nor Howard can ignore the AUS’s massive political Centre of gravity. The moment Howard returned to “conviction politics” on IR he lost the Centre.
More generally, the internal dynamic for ideological change has more or less collapsed. AUS’s non-ideological conservatism springs mainly from the “Culture of Contentment” (“relaxed and comfortable” “white picket fences”) and partly from the chequred history of recent experiments in New Liberalism over the past generation (“reform fatigue“) .
Most of the populus do not regard the political sphere as a focus for ideological identity, mass-organization and movement change. Impetus for such change has gone from communal to more individual domains. The desire to “make the world over” has de-volved to the professional and personal spheres: think mid-life career changes, brain-drain to the US/UK, dating websites, home rennovation, celebrity chefs, body make-overs.
The only thing that can really change AUS’s stable political equilibrium is a massive global shock, such as GFC’s, AGW’s or another homegrown 7/07. But, as I predicted, AUS appears to be escaping the GFC “relatively less-scathed”. That leaves AGW as the kind of crisis from which the Left could profit politically.
At the time of writing AUS’s Left-liberals (ie Greens) do not have much prospect for radical institutional change despite winning most recent ideological battles and using political correctness to neutralise their disadvantage in the Culture Wars. They are effectively dis-enfranchised by AUS’s conservative political insitutions. Locked into their inner-city sanctums they are caught between an unchangeable constitution and implacable political duopoly. No wonder their netroots get so cranky!
So in one of those ironies of History so beloved by radical historians, the prospects for radical social change to the AUS political system now rest with a movement founded on conservatism.