Tuesday, 13 May 2014

The Budget.

Okay I have asked whether Joe Hockey is a LIAR or DELUSIONAL. I think it must be the former.
He made changes from PEFO so MYEFO showed the budget blew out. What he didn't say was that HE increased spending and changed economic assumptions that made it so. See the Kouk here ,here and here.
He knew the state of the budget and he knew it was not an emergency.
If he believes the economy will grow well below trend levels for Nominal GDP then he should say so. He hasn't. He has implied very strongly that conditions are back to normal. Trend Nominal GDP would mean a budget in SURPLUS.
The RBA was certainly on the money when they estimated the public sector would add about 0.4-0.5 percentage points to GDP. Thus the Budget is not contractionary as Wayne Swan's last budget was only less expansionary than Hockey has made the current budget.

The major cuts are back loaded so Hockey is assuming a stronger economy later on can take those cuts.Most of the major cuts are put onto the States mainly in Education and Health. Clearly Hockey is trying to get the States to demand an increase in the GST and even broaden the base.
We shall see.
I wouldn't be surprised to see the Government to lose from the budget. the Medicare co-payment will hit young families and older people. Do not forget the co-payment affects blood tests ans X-rays something you have to have if you go to a specialist
Also the lamentable excuse for lying makes it even worse.
The punters except politicians to lie. Howard was pretty successful and he lied profusely. The point was he have a reason which was accepted sometimes.

All in all I was more worried about the last lamentable episode of Castle!

Postscript

Mark Banisch make a comeback  and  John Quiggin's opinion