Posted by Blogger Name. Category:
Australian Federal Budget
,
Bill English
,
Global Financial Crisis
,
Joe Hockey
,
John Key
,
The Budget 2014
,
The Lucky Country
,
Tony Abbott
,
Wayne Swan
The Herald describes tonight as "crunch time" for Australian Prime Minister Tony Abbott. Federal Treasurer Joe Hockey will deliver the first Budget of the Abbott era, and there's a lot riding on it:
Tonight is make-or-break night for Prime Minister Tony Abbott as his Government reveals its first Budget to a nation that is expecting the worst.
How Abbott has framed his economic strategy and how he markets it to voters will define his first term and, possibly, determine whether he wins another. He will present Labor with a huge political target of broken promises that will fuel the Opposition's rhetoric for the next two years. Breach of faith is not easily forgiven by the electorate, especially when it hits their hip pockets.
Tony Abbott and Joe Hockey will be understanding just how John Key and Bill English felt when the books were opened to them after the 2008 General Election. The New Zealand economy was then in freefall, having gone into recession in the March quarter of 2008, and continued in recession in the two subsequent quarters. And this was before the Global Financial Crisis bit deeply.
Australia survived the GFC relatively well via some novel stimuli applied by the Rudd-Gillard-Rudd Government. But much of it was artificial, and the writing was on the wall this time a year ago. We blogged about it at the time; having forecast a surplus of of $1.5 billion, Wayne Swan instead delivered a deficit of A$19.4 billion; a A$21b turnaround in the space of a year.
By the time Australia went to the polls in September and kicked Labour out of office, things had got even worse, and incoming Treasurer Joe Hockey abandoned the plan to be back in surplus by 2016-17. We will find out the long-term outlook for Australia when Joe Hockey delivers the bad news tonight.
Abbott and Hockey have little option but to go for the jugular tonight, and hope that one awful Budget will buy them time with the voters; the Herald continues:
Abbott is clearly betting on voters' short memories, hoping that by slugging them so early in the political cycle the pain will ease and, with an improving economy, reduce the threat of retribution at the next election.
Treasurer Joe Hockey has included a bit of sugar: twice-yearly increases in the fuel tax will fund A$40 billion in roads programmes, matched by the states and private business; the debt reduction levy will hit only high-income earners; politicians and senior public servants will go without pay rises for a year.
Other sweeteners may also emerge tonight. But the politics centre on whether any economic gains emerge in time to offset the bite of cuts to some of the most sensitive areas of government spending.
It's little wonder that emigration from New Zealand to Australia has slowed down, and that more and more Kiwis are returning from what was once referred to as the Lucky Country. That was evidenced in last week's Household Labour Force Survey result, where although the number of people in work hit a record level, the actual rate of unemployment was unchanged.
Bill English's sixth Budget on Thursday is going to be far more encouraging than Joe Hockey's first. Mr English will doubtless remember how difficult his own first Budget was in 2009, and we're sure that he will have sent an encouraging word to his Australian counterpart.
We will have the details and reaction to the Australian Budget tomorrow.
