Richard Holden writes in The Conversation (8.5.18) that, even though this year’s federal budget is pretty good politics and reasonable economics, on almost every front it is a missed opportunity to be bold.
‘Even though this year’s budget is pretty good politics and reasonable economics, on almost every front, it is a missed opportunity to be bold.
‘Last year’s budget was a bank-bashing bombshell, with 4-5% of profits for five of Australia’s biggest banks yanked away, not for financial stability reasons, but because, as Treasurer Scott Morrison hinted at the budget press conference, people don’t like the banks very much.
‘With that populist mission accomplished, this year’s budget is more mundane. The much-vaunted return to surplus is now planned for 2019-20 at just 0.1% of GDP. In 2017-18 we are told to expect a deficit of 1% of GDP ($18.2 billion). That’s before the forecast 3% real GDP growth from 2018-19 onward kicks in. An heroic assumption.
‘Compare that to an actual of 2.1% in 2016-17. That topline forecast is not insane, but it is certainly bullish. One is tempted to ask the Treasurer whether he would bet a year’s salary that real GDP will be above 3% compared to below that. I suspect he wouldn’t.’
Government timing tricks hide the real budget story
Richard Holden writes again in The Conversation (9.5.18) that, with regard to the federal budget, it seems that timing tricks are now a ‘thing’ in Australian politics; revenues are brought forward and spending pushed back for cosmetic effect.
‘This year’s budget may not have had a whole lot of surprises, but it was chock full of crafty timing tricks. The government’s new personal income tax plan is implemented over seven years, the much-vaunted return to surplus begins in 2019-20, and support for the “smart economy” involves $2.4 billion over, wait for it, 12 years.
‘In fact, it seems that timing tricks are now a thing in Australian politics. Revenues are brought forward and spending pushed back for cosmetic effect.
‘The Coalition’s company tax cuts are scheduled to be implemented over a full decade, Labor’s plan to cut back on negative gearing has modest short-term impact on the budget but ramps up over time, and on and on.
‘This gradual, glide-path approach to fiscal policy is sometimes good, sometimes not so much.’