Commonwealth Budget For 2019/20 Won’t Save The Bacon

By Des Moore

In interpreting the budget it is important to realise the Coalition will face the election in May with electoral polling which indicates it is almost certain to lose. As such, apart from possibly indicating the Coalition’s budget as no more than a manifesto with which to start the election debate, the same applies to the manifesto which Shorten has announced. He is now further developing that by announcing yesterday the 50% compulsory electric cars by 2050, which has (rightly) been widely characterised as absurd. Shorten has also failed to indicate the costs of his environmental policies. This situation further widens the gap between the two parties on the issue of dangerous global warming which appears likely to be a major discussion item. Unfortunately, the Treasurer’s budget address re-stated the Coalition’s existing policy of reducing emissions as stated in Paris and announced a $3.5bn “climate solution package” apparently designed to soften the moderates within the Coalition. Another bad poll would provide the opportunity to moderate this policy but it looks as though such a moderation is not politically possible.

Yet it is reported today that three senior ministers, including Morrison, have decided overnight to add over $300 mn to energy supplements and amend the budget the day after it was introduced!

In a situation of emergency one possible policy change on the environment might extend to pointing out that the prediction in temperatures by supposed climate experts has been three times higher than the actual increase in temperature as published by the IPCC. This failure of “scientists” to get anywhere near a meaningful prediction in temperatures indicates the need to urgently review the dangerous warming belief and provides a basis for at least moderating current policies. This research indicates that the most likely warming over the period to 2100 does not justify the current expenditure by governments of squillions of dollars on reducing the usage of coal.

Following are my brief comments on the major items in the Budget:

  • Overall, there is no indication that the Morrison government aims to reduce the size of government. Estimated payments (ie expenditure) by the Federal government are about the same proportion of GDP throughout the four years covered by the budget (24.5 -24.6%). That is fractionally lower than in 2018-19 (24.9%) but that probably reflects a spending splurge in that year to reduce the amount to be allocated in the budget year. That is estimated at 25.2% of GDP, which is fractionally higher than in the last year of the Keating government in 1995-96 and is higher than in the last few years of the Howard government;
  • Treasurer Frydenberg (and Morrison) have claimed that the budget showed they had not increased taxation. But tax as a proportion of GDP is shown as slightly higher in 2019-20 than in the previous year (23.1%) and only fractionally lower in the last of the four budget years (2022-23) for what that may be worth. As there is no data readily available on the split between company and personal income tax, the increase in company profits may mean that personal tax proportion of GDP may have been reduced. But total estimated taxation in the current and next three years is the highest proportion of GDP since the final years of the Howard government in early 2000s;
  • As has been much acclaimed by the Treasurer and Morrison, after 11 years in budget deficits and a consequent increase in net debt, a surplus is estimated for 2019/20 (0.2% of GDP). But this is not a result that a government would normally boast about, which is probably why Frydenberg has limited his reference to the four year total. It is also exposed to possible minor adverse effects from reduced company profits due to falls in commodity prices. It’s good to be “back in the black” but the aim should be to achieve a much higher surplus and pay off more debt.

Overall this is a useful budget (a “B” perhaps) but it falls short of what is needed to avoid scattering spending to buy votes, to reduce debt and does not provide a bulwark against attack from serious adverse changes in economic conditions here or overseas. It does provide a test for whether Labor is prepared to maintain the aim or fall back to the deficits incurred by Rudd. Hopefully, the latter are so recent that Shorten will be able to persuade his left wing to stick to the surplus aim.

5 thoughts on “Commonwealth Budget For 2019/20 Won’t Save The Bacon”

  1. We should ask why a country that can print its own money is now in such debt. Borrowing money then dumping it on the Australian economy causes exactly the same amount of inflation as printing it. The proper method during the GFC, to keep the economy stable and to ensure employment would have been for the Federal Government/Treasury to have loaned money to the States with an interest debt to absorb inflation. The money repaid to the Treasury should then have been spent on the States – a circular economy. Today we would owe nothing outside of Australia.

    Instead, Rudd and Swan borrowed from their mates and we will be in debt for decades. I suspect Rudd wanted to ingratiate himself with the banks that run the UN by getting Australia into debt so that he could eventually head the UN. Unfortunately, the current Federal Government did not sponsor him with 300,000. Poor Mr Rudd.

    Note that the Treasury borrowed money it was entitled to ‘print’, to keep the Australian dollar high, then spent several years telling us that it was struggling to make the dollar fall!

    When we again become debt free, and therefore in charge of our own finances we should introduce laws to prevent our/their politicians borrowing money that Australia could instead print.

    Rudd and Swan did not rescue us from the GFC. They extended it for decades.

  2. The Morrison government ought to have stated repeatedly that after Rudd/Swan borrowed and spent the money they borrowed there was nothing left for the incoming Abbott government to function so that even more money had to be borrowed. When a government is in debt the creditors prevent it from ‘printing’ money to escape the debt.

    Remember that around this time the US government faced having to shut itself down to save money and Australia faced the same problem.

  3. In the coming Federal Election, the GREENS and GetUp are advocating 100% renewables by 2030 and the Labor Party has policies of a 100% emissions abatement target by 2050 and 45% abatement by 2030 based on 2005 levels.

    As we are all aware these policies are insane and if a Labor/Greens Government is elected will decimate Australia economically and in every other aspect of life.

    How can we provoke and get Big business and Small Business their representatives (The Business Council of Australia) (The Small Business Association) to stand up and very vocally tell everybody the consequences of these policies?

    Do we have any Saltbush Club members or groups of members who can financially take out (page or half page) advertisements in all the major papers and alert everybody that we are being conned? The complicity of some newspapers in not exposing the truth is reprehensible, particularly as Anzac is coming up. Our Diggers are being let down.

    After all it is the future of Australia and our children and grandchildren that is being affected.

  4. Follow the money!

    Which international government financiers support Global warming alarmism and emissions trading?

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