Budget Savings, Protecting Voluntary Agencies, Clinton’s Health, Syrian War
With the imminent resumption of Parliament some warming-up is occurring. In The AustralianFinance Minister Cormann is reported as making new claims that the Coalition has already made large budget savings ($221bn over 10 years locked in) and that more could be made with Labor support. It appears Cormann refers to possible savings additional to those proposed by Turnbull to implement a miniscule $6.5 billion in budget savings said to have been agreed by Labor. But why hasn’t the Coalition detailed some possible additional savings?
GST Shares, Budget Strategy, NT Royal Cn
In my Commentary on Tuesday I suggested that Turnbull’s announcement at the WA Liberal Party’s conference held last weekend that each State would now be guaranteed a minimum share of GST revenue was, once again, lacking in any serious analysis or any checking first even with senior ministers, let alone other states. It has subsequently emerged that the new arrangements, the calculation of which has not been stated, are first to be discussed with other states and that it is unclear when they might start (although WA Premier Barnett who has an election next March says he thought it would be this calendar year). The Australian also published an analysis on the assumption that the minimum share would likely be 75% and that WA (now receiving only 30%) might not receive any future benefit from any such arrangement. My letter to the Australian on the issue was published yesterday with four others (see GST Shares).
Sloan on Budget Outlook
Recipients of my recent Commentaries will be well aware of my expressions of concern about the budget outlook in the last couple of weeks. Friday’s Commentary expressed additional concerns after the publication by the heads of Treasury and Finance in PEFO of their concerns, albeit expressed diplomatically (at the same time it was reported that Treasury head Fraser would resign after the election: he will be a serious loss and his successor under either party will find him difficult to follow). I also drew attention to the Spectator Article by John Stone, which not only savaged the Coalition’s budget but pointed out that neither Labor nor “independent” journalist commentators have (with one or two exceptions) drawn attention to the seriousness of the economic problem Australia now faces. I concluded by suggesting that the Coalition should acknowledge the problem and indicate that after the election it will start a program of reducing spending by at least 2% of GDP over the next three years.
The Budget Outlook after the PEFO
As expected, today’s publication by Treasury and Finance of updated fiscal and economic estimates and projections – the so called PEFO published under the Charter Of Budget Honesty - do not show any significant change since the Budget of 3 May. I have include the most important sections of PEFO here.
Will there be Real Budget Tests Available Publicly before the Election?
Today’s Financial Review has published my letter (see below) drawing attention to the importance of providing analysts with an accurate picture of the effects on the budget of policy announcements by both major parties. Separately, the AFR has reported (also shown below) that the Treasury will actually publish its assessment of the budgetary effects on Friday. But one question is whether sufficient detail will be provided to allow a meaningful analysis of for example the extent to which Federal government expenditures are drawing on national resources and further adding to the higher tax burden which the 2016-17 budget already proposes. Similarly, will we be provided with revised estimates of the deficit and (the likely) higher debt levels?
Election Claims of Economic Benefit
On 9 May my Commentary drew attention to the estimates for the budget and the economy in the next two years and suggested that these should be the starting point for assessing election proposals by the major parties. I repeat here the following table summarising the budget estimates.
Budget & Economic Plan (Sic)
How to interpret the Budget? My initial reaction was “much ado about nothing”, by which I meant that while there have been reductions in superannuation “concessions” and in tax rates for small businesses offset by increases in tobacco excise, together with a small initiative on youth employment and commitments to fund various types of infrastructure, there was little change over the next two years in estimates of total government spending and revenue relative to the total economy.
Turnbull Visit to China
Rowan Callick, who is now China correspondent for The Australian, has written two interesting articles relevant to Australia/China relations. He seems to have good contacts with both Chinese themselves and with outside experts on the Chinese political situation. The shorter one is of particular interest as it assesses the influence of Xi and argues that he operates as in a sense a “benevolent” despot, but with the benevolence not extending to corrupt senior officials (see Callick on Xi). Xi, who is said by Callick to have drawn all power to himself, is said to be favourably disposed to Australia.
Electoral Position, Defence & Budget Policies
Today’s Australian publishes an unchanged electoral position of the two major parties (TPPs of 50% each) but another reduction in Turnbull’s net satisfaction ratio. He is still well ahead of Shorten in the unchanged Better PM category (55/21). But the uncertainty about Coalition policy in various areas has been allowed by Turnbull to reach the point where an “early” election seems increasingly likely, with policies being unduly determined by electoral “demands” and Turnbull himself having a bigger say as to what is in the policies.
Australia Day & Some of Its Consequences; Budget & Spending Levels
With minimal editorial change, today’s Australian has published a letter of mine praising the virtues of the present Australian political system. The Letters Ed interpreted it more as an attack on the US system (which it is indirectly) but its main intent is to question the merits of the alternatives proposed for us, including the republican one for which our current PM led the charge in the 1999 referendum but is now suggesting that any move should await the death of the Queen. While he knows Prince Charles favours a republic, he is off track even there: as the monarchical head for Australia Charles would have no legal power or influence on policy.