Australia’s fiscal straight jacket tightens to strangulation point

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As the Budget falls apart on pressure from cuts to ludicrous forecasts and the iron ore hammering, Prime Minister Turnbull is softening us up for little to no action, from The Australian:

An analysis by The Australian shows that Treasury’s decision to jettison its highly optimistic growth projections will leave the budget deep in deficit at the end of the 10-year, medium-term ­period, before allowing for further softening in Chinese demand for our exports. A predicted surplus of $16 billion in 2021-22 could be virtually wiped out.

…“This doesn’t mean we should just go out and slash and burn, cutting individual spending programs irrespective of their benefits to the community.”

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.