Monday, 2 February 2015

Why the Government is in trouble

There has been a lot of talk of why the Government is in trouble.
I thought I would look at in in chronological terms.

Why did they win the last election. The main reason was that the Nominal economy was in recession. See Skeptikoi and me here and here.

The present Government did not have a honeymoon. This is highly unusual. Why did  this occur?
It appears from both parties polling is that the electorate believed the opposition and their media followers that the previous government spent money like drunken sailors. Hence get spending under control and hey presto everything is okay again.

Only one problem. It wasn't the problem and people saw this when the government came into power. They sounded awfully like the previous government about problems with revenue etc and how getting the budget back into the black would take a lot longer than they thought.

Most people thought they had been wood ducked. This was exacerbated when Abbott and Hockey tried to say the cupboard was bare and they were not prepared for this. Although the electorate are not avid followers of PEFO. They do know it means Oppositions can never be misled about the economy or the budget.

People simply never trusted the government after this. More so when the government insisted they had not broken any promises when they patently had.

This means a change of Leader will make little difference. A new Leader will be as culpable as Abbott. A new Treasurer will be just as culpable as Hockey.

They desperately need the $A to continue to fall so nominal GDP gets back to trend.