Morrison’s Approaching Waterloo
It may be early days but Joe Hockey’s second and final attempt to bring down a credible budget appears to be unravelling already. Even on the night of his budget speech in May it was clear that his growth projections were far too optimistic.
It makes one wonder if the whole budget process was one started first by establishing a bottom line and then working backwards, fudging the figures necessary to substantiate it.
Is that how they eventually arrived at a growth estimate of 2.75%? Perhaps it was a case that if it sounded unattainable, to hell with it, that’s what it was going to be.
And then they made it 3.50% all the way out to 2019/20?
The Reserve Bank announced on Friday it was downgrading its growth estimate to 2.25% for the current fiscal year. Surprise, surprise! If correct, that has the potential to blow out the deficit by a further $11 billion.
Not that we should be concerned about deficits. It’s the ability to manage them that should have us concerned; particularly when our current treasurer thinks we only have a spending problem.
The fact is, deficit spending is what we need right now, but it has to be targeted. It has to be value adding, creating employment and making a positive contribution to our GDP.
The current deficit projections cannot be attributed to anything positive because they are essentially caused by over-optimistic estimates, not excessive spending. While revenue for the first three months of the May budget is on track, giving Scott Morrison some breathing space, it is based on reduced earnings that are likely to continue declining.
Peter Martin in ‘The Age’ says, “The charts in the budget that predict a return to surplus by 2019-20 were built around an assumption of fast economic growth of 3.5 per cent in the five years to 2021-22.
That growth estimate is simply unreasonable and based more on hope than insight. That means revenue projections over that same period cannot be achieved without significant tax increases. Realistically, a surplus is not on the horizon any time soon.
How long Morrison will continue to kid himself about his perceived revenue/spending problem remains to be seen but sooner or later he will have to face the reality of a slower China and a population not growing as fast as expected.
He has also stated that any increase in the GST would not be used to boost the overall tax intake. How could it not, unless it is all given away in compensation. If that’s the case, why bother increasing it?
Thus far, Morrison has given no indication that he understands how to manage a national economy any better than Joe Hockey. I have no doubt Malcolm Turnbull has a better idea but he is hamstrung by a neo-classical mindset that suffocates his extreme right wing colleagues.
This situation, therefore, foreshadows a difficult time for both men. Sooner or later, unless some Chinese miracle occurs, there’s going to be a clash of ideologies, a seismic shift that will see one of them emerge triumphant, while the other goes the way of Joe Hockey.
If it’s Morrison that survives, the economy and by extension, the Australian people, will be the big losers. However, the spin merchants within the Liberal Party will camouflage it such that it is not likely to be apparent until after the next election.
Without a radical change in strategies along the lines that Italy and Canada are starting to entertain, we will continue in decline for some time yet.
And we should not expect Andrew Robb’s Trans Pacific Partnership (TTP) to come to the rescue either. The news from Hilary Clinton is not good. It is unlikely that, in its present form, it will achieve the 85% GDP target of member nations it needs, for approval.
I suspect Scott Morrison is about to meet his Waterloo.
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Return to home page“He has also stated that any increase in the GST would not be used to boost the overall tax intake. How could it not, unless it is all given away in compensation. If that’s the case, why bother increasing it?”
So they can cut company tax.
Scott Morrison “about to meet his Waterloo” One can only hope! Please, please make it so!
The ideology is all too apparent. The tax “reform” being proposed seems to revolve around an increase in the GST, followed by an idiotic proposal to pay the people compensation. Tax reform has to include superannuation cheating, offshore companies paying their fair share of tax, subsidies to mining companies, negative gearing, inheritance tax, property acquisition, a proportionate tax on excessive income, a deposit and/or withdrawal tax on bank accounts…the list goes on. The GST waffle is simply to deny us a proper and thorough overhaul of the entire taxation system.
Couldn’t happen to a nicer bloke. Well played Turnbull. Handing the poison chalice to a potential rival was genius. However, we know that this won’t be the outcome.
I suspect Turnbull’s strategy includes Morrison’s Waterloo! Why else, (OK factions that they don’t have according to MT) would you appoint such an inexperienced and nasty character as the Treasurer? Morrison is part of the punitive neo-con far right and as such will drive us over the recession cliff and climb back up to blame “all” of the welfare cheats and senior citizens who pushed us over! But seriously? Is there anyone else in the current LNP who can do the job? Malcolm may have been OK but he will still run the country like it is a business that has to make a profit for his shareholders (and yes I mean the top end) but he can’t do both jobs and they know he is their only chance of an election win next year! Shorten needs to be tossed and replaced with a better OL but again who? At this rate there will be an astounding result at the next election that will even have Antony Green stunned!! Australians need to take a long hard look at who they are voting for! Politicians aren’t what they used to be and way too many of them are in it for the politics not the people!
Most politicians are in it for the gauranteed indexed pension for life … particularly the liberals … sounds cynical but, these days, is true …
Turnball has the title, Morrison has the power. The outcome of the next election will still see Morrison as the leader of the LNP , regardless of the outcome.
Morrison may very well fall foul of the ICC before too long ..
nobody sane would elect him to leadership with that sword of Damocles hanging above him.
Where is the outrage condemning this government for getting their predictions wrong, very wrong? Not that it really matters. No one has a crystal ball.
The hubris was oozing from Turnbull yesterday. There has been discussions on ABC radio yesterday with a researcher that has studied leaders and what brings them down.
One reason cited was hubris. The leader comes to believe they can do no wrong. Don’t listen to advisers, saying holding out has pay out for them. Thatcher belonged to this group.
This government (lead by two incompetents) seems to spend most of its time saying what it can’t do. You know, NDIS, Gonski, NBN, health, ABC/SBS, etcetera, etcetera, etcetera. What have they done? Our borders are secure (which they don’t talk about, cause they may have to explain) and we gave financial respite to mining corporations. Thank you, Mr Kelly. Any chance you want to be the treasurer? Take care
Any chance mal _rough could be doing a bit more skulduggery and undermining?…………..Whatever it takes?
Two very nasty people who are political thugs against the battlers: Morrison and Corman. Having to chose one, is like: who do want to share your bed with? A scorpion or a centerpede.
John,
In 2013, the Liberals were able to reduce Labor’s economic management credentials down to one figure: the “debt & deficit disaster” national “debt”.
If the debt has increased under their stewardship, will they be able to wave a magic wand and throw a murdoch invisibility cloak over this figure or have their two excellent budgets actually reduced the figure?
Interpolating the infallible Wikipedia figures, we owed creditors approx $275 billion on the day the adults took charge. After only 12 months, and including one of the most thoughtful budgets in living memory, the debt had only crept up to about $330 billion; an increase of only $55 billion for the first champagne & cigars year.
This increase compares very favourably with Labor’s massive $25 billion increase in the last chaotic,
disastrous year …..
….. but wait! there’s even better news!
In the year to September 2015, our obligation to our faceless creditors only trickled up about $46 billion to $376 billion. This means our increase has DECREASED by $9 billion a year!
Look, I can understand how all you people out there in AIMN land have difficulty following these complex figures so I’ll precise them for you: by 2065 we will have the debt under control. Isn’t thst right, NoSy?
No wonder Labor hasn’t raised the topic.
Geoff,
Australian Government Securities on Issue as at November 6, 2015 $393,838m
October must have been a very expensive month
Kaye,
It’s the stopping of the boats of those bloody illegal boat people again or maybe they had an overdue interest payment but thank goodness they’ve got it under control at last.
I’m tipping an election before Christmas to cash in on their economic success.
Geoff, sounds like it’s all good then?
It’s all those bastard kiwis we have locked up on Christmas Island. Torture is so expensive nowadays.
http://www.buzzfeed.com/alexlee/kiwis-in-detention-christmas-island#.ihqjyr8r2w
In the lead up to the Paris Climate Conference, lets see if Washminster-style repressive democracy centered on Versalles on Lake Blxxxy Griffin, will declare an end to the FIFO that is Canberra, show some leadership.
Make all roles flexible.
Reduce the number of fed gov departments to about five: DPC, dollars/ benchmarking, foreign/ defence, justice and may be infrastructure, rest can be done by the states.
Use COAG’s national high-end TelePresence conferencing system, cut down on travel expenses (or in an alternative reality known as entitlements), instead of the waste of time that is Question Time.
And so on …
Mandatory and binding referendums quarterly and online for anything over x dollars, affecting y people, z levels of government.
Half parliament given there are also state parliaments, and bring in a fed gov anti-corruption body.
Term limits, recall provisions, popular initiatives.
By all means broaden or deepen the GST, but drop stamp duty, payroll tax, and reduce personal and company income taxes to equal levels.
Perhaps go one better, a flat tax on income like Estonia (?).
And introduce campaign finance reform …
nobeljnet
Can we sack everyone involved in the parliamentary system, send them down to the dole office and start with a clean sheet?
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