8
May
2014

Deficit Levy, Heydon RC

Perhaps we are being bluffed but the (economic) outlook for next Tuesday’s budget goes from bad to worse. This is not to imply that there will be no reduction in spending or the deficit (although a private forecaster suggests the before-policy-decisions deficit will start larger than thought). But not only is the deficit levy confirmed (although now only starting at a higher income level): leaks indicate other tax increases will also occur.

The worrying aspect continues to be that spending reductions before the next election look almost certain to be too small and justified by the below trend growth in the economy and the Keynesian thesis that the economy could only handle a small reduction in the deficit. No analyst has as yet suggested why those on incomes below $100,000 (but at or above the average) should not be subjected to welfare cuts.

Economic analyst Judith Sloan is on the ball in asking below what the Coalition really stands for. Whether or not the deficit levy is a broken promise, it (and any other tax increase) does break with what the Coalition is supposed to stand for. And any acceptance by it of a Keynesian justification for going slow would be bad analysis.

The Heydon Royal Commission has gone straight into the union corruption issue in announcing that its first witness next Monday will be  a man closely involved in the slush fund Gillard helped establish. He has already voluntarily pleaded guilty. The chief executive of the RC invites “any person or institution who believes they have a direct and substantial interest in the scope and purpose of the hearing” to seek attendance. It will be of interest to see who applies or whether Heydon has to subpoena many.

ICAC has identified further illegal fund raising activity by a NSW Liberal Minister.

Obama’s offer to help recover the kidnapping by an extremist Islamic group of over 200 Christian Nigerian girls raises the question of why the US (and other Western countries) has not offered support to protect the dwindling numbers of Christian groups in the Middle East and, in particular in Syria.

Perhaps Rowan Callick has been unfair in his interesting article below when he describes “Secretary of State John Kerry, [as] the most ineffectual person to hold the post in living memory”.