What to expect from an ailing party and a government in exit?
Like every political analyst, I am looking forward to the budget night on Tuesday 14th May 2013.
Even though the government revenues increased during this financial year, we are heading to a deficit budget of around $17 billion.
Wayne Swan, Julia Gillard and Penny Wong have already conceded that they misinterpreted the economic predictions. When every credible economist of Australia were seeing no signs of a surplus budget, the trio were claiming all through last year that " the government will deliver a surplus as promised."
Any journalist and analyst is not surprised that the Australian Labor Party has problems managing the finances of the nation. They are too good at spending money which is not theirs and spend money that they do not have. Labor is known to be a government of multiple deficit budgets.
Wayne Swan does not stop saying that Australia's economy is strong and that we are the best in the western world and the OECD countries. The Treasurer also claims that " We got the fundamentals right". Who is "we" ? The business world or the government ? Government does not manage the economy. It is the private sector which creates growth and wealth in the country with the labour and brains they hire from workers.
Wayne Swan is trying to imply that the economy is strong because of the government fiscal and monetary policies and the incentives that they give business to flourish. How far that is true is disputable in view of the industrial laws they put in place since coming to office. If the big ones in the mining and resources sectors are doing very well, small and medium business are coping it sweet.
Wayne Swan and his mates have created a two speed economy in Australia. Everyone knows how many small business have closed shops and how the farmers are doing it tough with the high Australian dollar, not to mention the rising cost of living.
We also know that the Mineral Resource Rent tax did not bring in the billions the government was expecting because of the diminishing exports in that sector, again due to the high dollar.
The Labor government counted their chickens before they are hatched just as they got it wrong on the carbon trading price which they put for $29 a ton and while it is now around $6 in Europe. It may go even lower when we moved to an Emission Trading Scheme in 2015. Note that the carbon price is already align to the European market.
Despite the lack of revenues, Labor continues to spend and promise. The Gonski reform and the NDIS will require billions and billions of dollars. Where will the money come from ? We also just heard about a second airport for Sydney which will cost more billions.While all these policies are good for the country, the question is who will food the bill and from which sources ?
The revenues of the budget come from taxes, direct or indirect, i.e. from the people, the workers and businesses. When the Labor government borrows money to fund the deficit and its projects, it is like contracting a mortgage, on behalf of the nation. So the 17 billions that government will borrow or owes will not be refunded by Julia or Wayne Swan but by you and me, by the working people of Australia.
So do not hold your breath for any good news from the budget, be rather prepared to tighten your belt and think rather that we are a nation in debt. In the meantime Gina Reinhart, Clive Palmer and Andrew Forest are becoming richer and richer.
Rendez vous demain soir avec la catastrophe.
GDL.
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