Let the Aussie Budget Games Begin!
Look! Magic!
The long promised Budget surplus is the magic ingredient that has allowed the Reserve Bank to cut its official interest rate by 50 basis points, according to the Treasurer.
Let’s not dwell on the specific words of the RBA, but for the record: “economic conditions have been somewhat weaker than expected, while inflation has moderated”.
On Friday, the RBA released its quarterly Statement of Monetary Policy which said global growth is expected to be around 3.5% in 2012 and 4% in 2013. Now, the RBA is forecasting year end GDP growth for Australia of 3% by December 2012, 2.5-3.5% for 2013 and 3-4% for 2014. That’s not much better than the world growth figures which include the high growth Asian nations as well as the cellar-dwellers of Europe.
The continuing huge investment in Australia’s resource sector is expected to reach 9% of GDP, bolstered by the $165 billion of LNG investments and similarly vast numbers being invested in iron ore and coal mining infrastructure and operations.
Domestically, as we all know, things are quite different with weak house prices, a flaccid building industry, a limp retail industry and unsurprisingly, not much in the way of consumer and business confidence.
So the Treasurer’s 5th Federal Budget tonight should, if was to be a purely economic document, be focused on expansionary fiscal policy.
The reality will be the opposite.
Mr Swan is set to hack into any and every corner of spending to ensure a politically-driven budget surplus is printed into the headline of the document.
Australia’s working families will be cajoled into thinking that the Mining Tax and the Carbon Tax will form a basis for the enhancement of their superannuation savings and a cleaner environment.
The mining and transport industries will be aghast at the reduction in the diesel fuel rebate and clawback of the accelerated depreciation allowances.
Wayne’s budget will be littered with attacks on ‘rich’ Australians for being so rich, but this is no Robin Hood budget where the spoils of his plundering are shared with the ‘working families’.
The budget will likely be peppered with ‘delayed’ programs to conjure the impression that real savings have been made.
And the only people we can imagine who will be delighted at the massive expenditure cuts at the Australian Defence Forces will be Indonesian people smugglers.
Of interest will be the crossbench reaction to the budget. Only the government is in denial that this is a political budget so the debate over the contents could be quite interesting if the independents (which now include Craig Thomson and Peter Slipper) decide to apply any amount of scrutiny.
This budget will also reiterate many of the Green Party initiatives already announced to give the impression they haven’t been forgotten. The new Green Party leader, what’s-her-name Milne has fallen off the radar recently, but who could compete with the tabloid goings-on created by Messrs Thomson and Slipper?
The Coalition’s budget in reply might contain a few nods towards its policy direction, but it too will be short on chunky beef bits and long on thin pastry.
Words spoken by Grant Muddle.
