And we’re swiftly running out of rate cuts to make up the difference.
There’s a certain inevitability to it all, of course, as the commodities super-cycle bust destroys the Budget anyway but the fallout could and should be mitigated by a huge push to reform the Budget, not only in terms of savings, but in terms of productivity growth. That is, improving the quality of spending as much as the fiscal balance.
That’s where Tony should be going now, and Malcolm if he replaced him, but we appear instead to be swinging wildly into reverse for a binge of outright giveaways to save the Dead Duck.
That’ll boost growth a little in the short term and lock-in the crash in the medium term. Australian crashnics should be well pleased.
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.