Monday 17th of May 2021

what deficit?....

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In the early days of the Hawke Government, when Labor and a dynamic young treasurer, Paul Keating, kept confounding a hostile and suspicious business community with market-friendly policies, the cartoonist Patrick Cook would draw the then former treasurer John Howard as a battle scarred veteran.

 

 

Howard was covered in plasters and bandages of the battles — of which the legends grew — that he'd had with his prime minister Malcolm Fraser, to try to push a deregulatory agenda that was then sweeping other parts of the Western world.

By the time Paul Keating was handing down budgets, Cook's Howard had been reduced to a legless but heavily medalled old warrior on a skateboard, glumly looking on as his Zegna-suited successor strolled past, declaring nonchalantly there was "nothing to it".

Howard may have, and did, claim the satisfaction of seeing the agenda he wanted implemented. He had won the war, it seemed. But in politics it is often hard to see beyond the victories of individual battles.

So spare a thought for Wayne Swan, as he watched Josh Frydenberg almost nonchalantly dump a decade of debt and deficit warfare on Thursday and declare that the overwhelming economic target of the government needs to be jobs, and that the focus of budget policy had to be on keeping the economy ticking over until we got to even lower levels of unemployment than existed before the pandemic.

We couldn't reduce government spending, Frydenberg told us, even when employment growth was even stronger than it had been before.

Just like that! All the things that Labor had said in the GFC — for which it had been relentlessly attacked for profligate spending — were suddenly all the Coalition rage.

 

Read more:

https://www.abc.net.au/news/2021-05-01/frydenbergs-budget-pivot-puts-government-on-path-for-judgment/100106604

 

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Budget tip: Josh Frydenberg will announce big tax cuts on Tuesday week – but actually it will be the same extension of a tax cut that he announced in his last budget, the low to middle income tax offset (LMITO).

That’s about the only thing that makes political and economic sense for this government with an election to be held within 12 months.

It explains the direction of Mr Frydenberg’s very successful pre-budget media management over the past 24 hours, but it still doesn’t overcome the fundamental falsehoods of the headlines he managed to spin:

 
  • It won’t be the “big spending” economy-boosting budget as dutifully reported
  • Fiscal policy will stop aligning with monetary policy
  • We will still have to deal with fiscal contraction despite the talk about concentrating on reducing unemployment first.

It’s always a good idea to pay attention to what federal treasurers do, rather than what they say. That is particularly important when a government’s first priority seems to be media management and deflection.

With the Morrison government in strife over broken vaccination promises, this week has been prime time for “look over there, a puppy!”

The Prime Minister was at it with military photo ops in Darwin, hot on the heels of loyal public servants and ministers stirring the “drums of war” pot and needlessly throwing stones at our biggest trade partner.

Next up on Wednesday night, the Treasurer made the now-standard drop of a well-spun selective preview of his Thursday speech, which was itself chock-a-block with cherry-picked figures and spin.

And it was swallowed without askance.

Frydenberg aims to spend big to fix jobs and deficit” declared the AFR. “No austerity: Frydenberg to fire up economy in major shift to budget policy” recorded the SMH, and never mind the Murdoch press.

The core fallacy was there for everyone to see (if they thought about it) in the Nine Entertainment metropolitan dailies.

 

Read more:

https://thenewdaily.com.au/finance/2021/04/30/michael-pascoe-watch-what-frydenberg-does-budget/

 

 

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