It’s that time of the year again and with less than a week until the official announcement the budget buzz has begun. Let’s take a look at what has managed to slip out from the cracks in parliament and see what that means for Australia at large:
- Higher taxes for the rich, primarily aimed at softening the large deficit that will last for many years.
- Salary sacrificed superannuation contributions capped at half their current rates.
- Increase in the pension by $30 a week.
- An increase to defence spending to the tune of 10% (or $2 Billion).
These are interesting points, mostly for the fact that many of them mirror what the United States did with their budget. Most notable are the almost direct copies of an increase in tax for the wealthy as well as a large increase in defence spending. I can’t help but think that this is a little bit of me-too-ism from the Rudd government as the decision has been well received by the working class and not so much from the corporations. Saying all this though Rudd and Swan are making the best of a bad situation and will continue to look to score political brownie points throughout the economic crisis.
The other issue here is that Swan has stood his ground firmly when it comes to delivering the tax cuts they promised a while ago. I can admire their dedication to delivering on an election promise but when they’ve stated that the budget deficit will last for such a long time it seems like a terrible move economically which won’t push their ratings that much higher in the polls. Again this mirrors the United States position of cutting taxes to increase revenue but when you’re in such a large hole of debt cutting taxes only serves to draw out the time the country stays in debt. It may soften the blow, but you’ll suffer for much longer because of it.
Personally the bits of the budget that I’ve seen so far seem to lack a cohesive strategy that I’d expect from the people running the country. Many of the ideas seem to reek of robbing Peter to pay Paul, with revenue generation coming from all the wrong places (people’s superannuation is really the wrong place) and then spending it by giving it back to the people they took it from. A strange bit of circular logic there.
I’ll still take all of this with a grain of salt as the strategy the government is planning to take will become all the more clear next week when the full budget is announced. It’s easy to get riled up over small bits of information like this and what we have is really only a small part of a larger picture. Still the parts I’m seeing right now don’t give me the best feeling about the rest of the picture.