On Tuesday and Wednesday we were all treated to an inundation of Budget media and research. Last night was Tony Abbott’s Budget reply and there is an echoing silence today. The MSM vaguely gestures a hand at it and there is NO research in the markets that I can find.
The best I’ve come with is ANZ’s morning wrap which offers the following:
In Australia, opposition leader Tony Abbott delivered his Budget Reply speech last night.The Australian reports the Coalition will: (i) accept most of the savings and tax measures proposed by the Treasurer in Tuesday night’s budget (with the Treasurer also committing to advance the legislative timetable to enact as many of these measures as possible over the next four weeks, the last sitting weeks before the election); (ii) (somewhat strangely) maintain the compensation payments and tax cuts to households associated with the introduction of the carbon tax, despite scrapping the carbon tax (reported as a pitch to voters to ease cost of living pressures); (iii) fund this decision by delaying by two-years the ramp up in superannuation payments from 9% to 12% to 2021 (this will also be pleasing to businesses who fund these payments for most workers); (iv) not support the Gonski education reforms; (v) deliver white papers on tax reform and federal-state financial relations within two years; and (vi) abandon the mining tax as planned (while scrapping some of the support payments linked to the tax). There was also a commitment to not shirk the need to return the budget to surplus, while also pledging to reduce the corporate tax rate modestly when affordable. The Opposition will also seek to cut red tape.
The silence could be out down to a few things:
- there is nothing to say because there are no policies
- the loon pond media and market want Tony to win
Still, it’s kind of unnerving with his Libs almost certain to come to power, just as the Australian economy enters a period of significant stress, that we don’t know more.
My own view is that Tony’s retention of carbon tax cuts (without the tax)will be quite stimulatory in the short term but it is not the kind of stimulation we need. I favour tax cuts in principle, but so long as the tax system favours property investment that’s where additional income will end up, in greater asset inflation and consumption. If anything that will work against boosting tradables.
As well, by my calculations, Tony still has $10-$15 billion in unfunded promises so at least there’s no obvious plan to increase fiscal drag.
But, really, there is so little to go on that this is idle speculation, which points to the real issue with Tony’s impressive silence. By blaming our growing fiscal instability entirely upon Labor, Tony has offered no framework for how the LNP will deal with the troubled times rolling down the pipe.
As a voter, that’s my main question in deciding.
