Tonight’s Budget reply speech from Tony Abbott is set to be yet another display of “small target” politics.
We can expect the Opposition leader to bag-out the Government’s financial record, all the while recycling the myth that the former Coalition Howard/Costello Government was a sound financial manager, a view debunked recently by the International Monetary Fund as well as on this blog. Expect also to hear grandiose claims about how the Coalition will manage the economy much better than Labor, bringing the Budget into surplus sooner, with minimal if any detail provided about how they will achieve this claim.
According to the ABC today, the Opposition remains intent on “delivering a package of tax cuts for families without a carbon tax”, suggesting the Budget deficit could potentially worsen under the Coalition, unless offsetting cost savings can be found. Indeed, the Coalition’s strong insistence that it would remove the mining and carbon taxes once elected looks to have painted it into a corner, making it that much harder to return the Budget to surplus.
For its part, the Government is expected to release figures today showing that if the opposition does not support key decisions in the budget, it will be $50 billion in deficit over the forward estimates.
My advice to readers is to ignore the Budget dross. The fact remains that the Budget is likely to stay in deficit for the forseeable future, irrespective of who wins office in the upcoming election, as the three strong headwinds – falling commodity prices (terms-of-trade), slowing mining-related capital expenditures, and ageing demographics – continue to bite.
The tweedle dum and tweedle dee of Australian politics won’t change these facts.
