Unfortunately Josh Frydenburg has taken a gamble.
He is gambling commodity prices stay high thus this boost to Nominal GDP together with the proposed tax cuts and offsets and decline in interest rates will be enough to stem the decline in economic activity in Australia.
Why is he taking this gamble? He believes the politics of having a budget surplus is too high to break the charade. In this he is also taking a gamble. He is gambling that commodity prices stay at high levels which will offset any deterioration in taxation or increase in payments due to a slowing economy
It is lamentable economics and politics..
As RBA Governor has stated the economy needs fiscal stimulus.The government should go directly Infrastructure Australia and implement their most recommended programs. This would grease the wheels of the economy and unlike tax cuts are only a temporary increase in the structural budget.
It is woeful politics because there is no such thing as expansionary austerity as we have seen many times here. Trying to tell an uneducated part of the electorate that only makes things worse if times get BAD!
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