The ALP has a much better fiscal policy than the Government.

One thing we state with confidence after the budget and then the reply by the Opposition is that the ALP has a much superior fiscal policy than the Government. What we do not know is how much better it is and we will not know until the election is going.

The Government has three major problems.

1. With nominal GDP growth expected to be at average growth rates or better then fiscal consolidation needs to occur post hast.
2. The Government's speed limit makes no sense as the Kouk points out. Economic growth can be very healthy when taxation levels are above the speed limits as the Liberal government headed by John Howard showed. This policy also puts a lid on fiscal consolidation. does anyone out there really believe any government can get expenditure down to say 22.9% of GDP to get say a surplus of 1% of GDP. it is currently estimates to be 25.2% of GDP this coming financial year.
3. The tax cuts out in the never never ( see John Quiggin or Ross Gittins) clearly show the government has no plan to reduce net debt or even have surpluses for a decent period of time.  

The ALP has much greater room to move because of the various measures they have announced to help restore the revenue government gets after it was decimated in the ALP years where the ration got back to levels we have not seen since when Keating was PM.

We will have to wait until the election to see how much the ALP puts the extra revenue into budget consolidation. My gut feeling is people would change their votes if the ALP went for greater fiscal consolidation ( assuming average or better Nominal; GDP growth rates) rather than greater spending and/or tax cuts.