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A Budget Primed to Backfire

We will know pretty soon, probably next week, how Scott Morrison’s fiscal statement (aka the budget) has gone down with the electorate. Trying to judge the mood of the voters today is fraught with difficulty. It is safe to say, however, that at least 52% will not be swayed by this so-called Labor-lite document.

Some would even see it as a complete capitulation of long standing Liberal values in their desperation to remain in power. For indeed that’s all it is; a pathetic attempt, not to balance the books, for they now know that is a bridge too far, but to give the impression that they can make the right call given changed circumstances. They will fail.

Initially, the swinging voter, however, might be impressed. Such is the ignorance at street level of what is really required despite what has been thus far, a fairly spirited reaction from Labor. But of one thing we can be certain. Any bounce in the polls for the government will be short-lived.

They now have too much baggage, both in what they have failed to do and what discontent exists within the party with this and other issues. All this means further displays of discontent that will, from time to time, spill over onto Main Street where those swinging voters, ignorant and ill-informed as they are, will recognise a government in disarray and revert back to their pre-budget position.

Taking a swipe at the banks is good politics, but Labor won that initiative a couple of years ago. By taxing the big four, the government has legitimised and strengthened Labor’s call for a Royal Commission. By forcing students to pay higher fees they have placed a generation at odds with a government full of graduates who received their degrees for free.

By drug testing welfare recipients, they not only demean the unemployed but clearly show their deep dislike for them. This resonates with all of us. This is blame shifting designed to disguise their inability to provide sufficient jobs for all those who want to work. It will end badly.

Bill Shorten has rightly emphasised the lack of fairness, the inequality of taxing the poor to service the wealthy. It is not a two day headline grabber. It is something that will become increasingly apparent as families continue to struggle meeting mortgage payments.

On Insiders this morning, Scott Morrison stated that the next likely move in interest rates would be up. He is right, but does he have any idea what that will do to the outer suburban mortgage belts of Sydney, Melbourne and Brisbane? For him, and his government, it will become like a festering sore that won’t heal.

As for the attempt to placate those trying to buy into the property market by offering salary sacrifice incentives, this too will fail. Who has the flexibility, in the short term, to establish a home saving account with sufficient funds that could keep pace with prices today?

The government knows, that to introduce a program abolishing negative gearing, the one issue we all know is fuelling the housing market, would mean most of their own members would be disadvantaged. They can’t bring themselves to do it. The rewards have been that good and they all want them to continue.

But they will pay for it in the long run.  It’s not that hard to see how an increase in interests rates will hit investors just as savagely as it will the average homeowner, now mortgaged to the back teeth.

This fiscal statement may well prove to be worse than Joe Hockey’s first effort in 2014. And wouldn’t Joe salivate at the thought of that.

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18 comments

  1. Freethinker

    Today Morrison agree that there is no way to stop the banks passing cost of the 6.2% tax to the customers, also he said, quote:
    “I accept the responsibility for all steps we have taken in the budget”
    What he means with that, for sure he is not going to resign if the electorate do not support the government?
    He also said that he is willing to take the Medicare levy increase to the next election if the senate fail to approve it.
    Are we going to have an early election?
    Is the Coalition betting in that this budget is an election winner?
    IMO, the next 2 months are going to be very interesting.

  2. LOVO

    John, A budget with no mention of human induced Climate Change is irresponsible to the extreme. The costs related to mitigation will be small change compared to the costs associated with the damage to business and housing and infrastructure and food and health and roads and rail…and…and..and….
    These stupid ideologues on the right will bring us all down! The ‘tipping point’ that is coming won’t take ‘pay-offs’, won’t discriminate between rich or poor..right wing or left…white or black.
    Time is not on anyone’s side… and is running out!
    The silly little guy sitting on the corner with a sign saying “The End is Nigh” is looking a lot smarter than the rabble in the Coalition. A pox on them 😠

  3. diannaart

    I agree LOVO.

    I believe that our future economy will not be sustainable if we do not transition to clean, sustainable energy sources as well as more responsibly produce our food and other goods, as well as direct action towards fairer distribution towards all people – even if there was no danger to our atmosphere, rivers and oceans

  4. Hettie Lynch

    Watch the stampede to the credit unions and building societies once the big five start passing that levy on.
    There is a limit to what people will put up with.
    I have been very happily banking with our local credit union, now the Regional Australia Bank for nearly 20 years. Great service, low fees, full internet service and no bastardry.
    Because the only shareholders are the customers, we win.
    But this budget is a farce.
    With the Thwaites Glacier now critically unstable, it’s not going to be long before we get a sudden rise in sea level. Perhaps 4 metres. That puts Sydney Harbour lapping at the underside of the Cahill Expressway at Circular Quay.
    Nasty mess at the Opera House.
    Goodbye Sylvania Waters, Double Bay, Bondi.
    Swimming lessons will not be adequate preparation.
    And still the same ole same ole tax breaks for the uber rich and hatchet jobs on the young, the old and the struggling.
    Such a capable, caring, provident government.
    Not.

  5. Freethinker

    Without the intention to hijacking the thread I would like to mention that there is no one political party or government capable to reverse the climate change due to human intervention if we all not change our style of living.
    I agree that we have to change the current macroeconomic models and not targeting a growth which depends in consumerism, but that change will be useless if people do not demand it and change their way of living.
    Based on the failed “test” done with the carbon tax with was only asking for a very small sacrifice by the consumers I do not have much hope of change until we will be in a big trouble and perhaps irreversible.
    On that note I guess that we can only talk about the current budget and the implications within the current macroeconomics model.

  6. totaram

    “But they will pay for it in the long run.”

    Come on John. Who is “they”? You know that these parliamentarians are a protected species by getting govt. funded (not taxpayer funded notice!) pensions that have no connection to anything else. Now this could be the fate of all Australians, if only they hadn’t fallen for the neoliberal bullshit about “financing ” their own pensions through “superannuation funds”, sadly introduced by the Hawk-Keating govt which can be excused for not understanding the full implications of a free floating fiat currency so soon after they introduced it.

    But that is the truth.

  7. bobrafto

    Let me guess the mood of the electorate.

    I’d say, there was some relief, probably just like the relief one got when Abbott got the boot just not on that level.

    Some people will be lulled and others will not be swayed.

    I predict a small rise in the polls. 49-51

  8. Freethinker

    I just read in the news that the Maribyrnong 128 ha of land that the federal government are releasing for affordable housing it is contaminated.
    Are this mob so incapable?

  9. John Kelly

    Totarum, “they” are a parliamentary party that will lose the next election. Nothing to do with their super. They will pay for it by losing government.

  10. wam

    sorry, john, prefer the insiders version: this budget’s direction is geared to public intervention and manipulation of memory will win them the next election, as it gives the lnp room to react quickly, in education and health. Plus it maintains the strength in borders and terror and leaves billy with no room to do anything but spend.

    climate change? here or the loonies and labor’s intellectuals but the rank and file not a real issue.

  11. John Kelly

    Wam, interesting how we see it through different prisms. For mine, the INSIDERS crew are too close to the action. While they may view some issues with greater insight than most, that doesn’t mean the general public understand or care. Their views don’t necessarily translate in the real world.

  12. Mhoira White

    Salary sacrifice incentives… Who is he kidding. You’re just saving your own money & if you are renting you are already stuggling to try & save for a deposit plus pay your everyday living expenses so how can you afford to put aside 10% of your income into super.

  13. wam

    hard to argue as cassidy has avoided any pro-labor panel with at least two pro-lnp usual.and the positive polls with billy 31 is most encouraging. However I am a pessimist and, since I was a lad, have seen the crooks luck and lie to win power in 20+ elections plus state elections so I know my facebook mob who are under murdoch’s labor spending thrall.

  14. Ella Miller

    JOHN KELLY, some things I don’t understand.
    On the one hand the LNP is claiming that Labor did not fund the NDIS…and we NEEDED the Medicare Levy increase to fund it BUT it won’t start immediately??? Have I understood this correctly? So if Labor did not fund it how will it get funded till the levy kicks in.?
    I have been very disturbed by the ABC’s move to the right ..in Insiders and the Drum? To what extent are they beholding to the LNP?
    I do believe we should hear a good discussion, covering both sides..BUT lately the ABC is leaning so far to right that it is frightening. We do not need another Murdoch press. And we DO NEED TO HEAR ALL VOICES…not just some.

  15. Matters Not

    interesting how we see it through different prisms

    Indeed! Same ‘facts’ presented! Yet an honest admission that there are many ‘interpretations’ possible?. Or as I prefer to explain it – different meanings given.

    By way of explanation – I don’t see humans (simply) as just empty vessels waiting to be filled with meanings. If that was the case, logic suggests they would react the same way. The evidence however suggests they don’t. The reason being that humans are, above all else, ‘meaning makers’.

    Not ‘receivers’! But ‘givers’!

    But for most – it matters not.

    Thus we have the ‘common sense’ that humans can’t create their world – but can only inherit same. Forever doomed to be the recipients. But never the …o

  16. John Kelly

    Ella Miller, the whole NDIS funding issue has been a political football going back to 2013. Labor did set a road map for funding the NDIS, but one that could easily be unfunded should another party decide to play ducks and drakes with it. The present government is doing just that. The funding issue is ongoing, it will need to be funded from now until forever. The government claims this has not been done. Well, how could it be done? It had certainly been funded in the 2013-14 forward estimates, but we are beyond that now so some future funding plan is necessary.

  17. Pingback: A Budget Primed to Backfire | THE VIEW FROM MY GARDEN

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