Max Gillies Smith thought the Abbott budget reply a series of stumbles. These include the promise that peoples “fortnightly budgets will be under less pressure as electricity prices fall and gas prices fall and the carbon tax no longer cascades through our economy.”
He also took money out of the super system, watered down the NBN and and released the GST genii.
Here’s a question: Why was Tony Abbott’s Budget reply so full of basic economic errors?
It was laden with statistical abuses (figures comparing Costello’s and Swan’s budgets), emotive language disconnected from reality (“skyrocketing debt”, “a spiral, deeper and deeper into debt”, “budget emergency”), sophistry (the implied need for “cost of living relief”), unsubstantiated generalisations (“bad government”) and simple fallacies, including a confusion of inflation with wealth (use of house and share prices as measures of wealth) and the unsupported notion that “smaller government” is the path to economic prosperity.
Above all, there was a glaring gap in the Opposition’s arithmetic. Abbott’s promise to cut taxes, increase spending and balance the budget just doesn’t make sense, unless, as is likely, there are yet-to-be-disclosed savage cuts (“cuts to the bone” to use the Government’s focus-group-tested cliché) in big program areas, such as health and education.
McAuley thinks the “illogicalities and falsehoods” may be intentional to throw us off the scent, to mask his real intentions.
McAuley sees Abbott as deeply conservative.
When he says that the coming election will be a referendum on the carbon tax, he’s really referring to a choice between economic modernisation and holding on to our existing industry structure.
“Reactionary economic vision” is the last phrase in the piece, and it may be more appropriate than “conservative” to tell us where Abbott is headed. He seems likely to downsize the economy.
I’m reminded here of Campbell Newman and the LNP in Queensland who trumpet the ‘four economic pillars’ of resources, agriculture, tourism and construction. No recognition of services (other than tourism) and definitely no nonsense about the ‘smart state’.
Conservative governments in the 1950s and 1960s had more vision than that.
McAuley draws attention to Abbott’s statement that government should be “only as big as it needs to be to do what people can’t do for themselves”
a view which, taken to its conclusion, leaves government with no more than a few functions such as defence and handouts to the poor, leaving health care, education and infrastructure all to distorted private markets.
It’s a view pushed by extreme economic libertarians, who cannot bring themselves to acknowledge that there are many things the private sector conceivably can do, but which governments do much better. Whether it’s a glib insertion by an economically naive speechwriter or a considered belief is hard to know, but it’s worth watching.
I’ve heard Abbott repeat it. A number of LNP politicians have spoken about the greater need for self reliance.
On the budget bottom line none of the usual economic commentators seems to have done the simplest of calculations, which I can’t do because I don’t have all the information. But here, broadly, is the problem.
Abbott’s starting point is Swan’s budget deficit of $18.6 billion. He accepts Swan’s $43 billion of cuts or “saves” which leaves him at that point. Then he made about $5b of his own. $400 million of that is a mistake, because the the Clean Energy Finance Corporation (CEFC) is not a budget item.
But the carbon and mining taxes are surely worth more than that (the carbon tax doesn’t shrink until 2015). Then he has to pay for the ‘direct action’ climate change program. His projected savings on asylum seekers are probaly fictitious, at least in the early years.
Laura Tingle made reference to this problem during Insiders on Sunday. McAuley also points to the “glaring gap in the Opposition’s arithmetic.” In the weekend AFR there was an article which had one of those highlighting quotes to the effect that Labor has calculated the shortfall as $26 billion. Unfortunately the relevant text had been edited out of the article.
The purpose of Abbott’s speech was to assure us that the adults would soon be in charge and we could all be relaxed and comfortable. Largely it seems to have worked on the commentariat.
Paul Williams in today’s Courier Mail has several interesting points. One is that Abbott addressed the TV audience as “you”. The Speaker would have been within her rights to make him address his remarks to the chair.
Also he pledged to ensure “the states are sovereign in their own sphere”? This takes us back pre-war and William rightly points out that “a 2010 Galaxy poll found 56 per cent support the states’ abolition.”
Labor has been looking for a point of difference and may have found it in Gonski. I think the politics would work best for Labor if one of Queensland and Victoria signed up. Assuming SA and Tasmania come on board and WA doesn’t that would leave Abbott opposing Gonski and Gillard with significant support.
Meanwhile Rudd is busy fighting the Qld State Government on school closures and other matters. This will help the Labor brand in Queensland and is probably the best contribution he can make, as well as shore up his own seat.
By the way, the gallery that clapped Abbott so enthusiastically was an invited audience. I wonder whether there is scope for games to be played on this one.