The Australian government has recently announced the budget for the 2009-2010 financial year – as a budget, it wasn’t too bad. Raising the old age pension has been on the cards for ten years now – I am surprised it has taken this long to implement it.
Infrastructure spending was always going to be the center piece and I guess you can thank the Howard/Costello era – they ran infrastructure spending into the ground so there are plenty of areas to spend big dollars.
Australia has been called the lucky country and to an extent we are. We have ridden on the back of a resources boom for the last decade and it will be resources again that take us out of the recession. China is one country that will be hit hard but it will bounce back faster than most countries – and they are one of our biggest customers when it comes to resources.
So the budget was a ho-hum affair really. The biggest issue to come out of it has been the mean testing of the private health insurance subsidy. I don’t quite follow the argument. I cannot for the life of me see why someone on $75,000 a year or more, would drop their health insurance because they lose a couple of dollars a week in a subsidy. In fact, I don’t know why we are subsidizing families on $150,000 plus with a seven dollar a week subsidy (and that is all it is really). It seems to be a storm in tea cup used to try and knock the budget.
No-No Mal, leader of the Liberal Party and supposedly our alternative Prime Minister, has been on a negative track since taking on the role. In Australian political history, no opposition leader has ever won office with a negative campaign. In fact, they have often lost ground.
His latest suggestion actually has me wondering what economic credentials he has – but of course, he was a banker before entering politics – and who got the world economy into its present state? Bankers!
The Liberal Party has suggested a return to the old days where beer and cigarette taxes are used to fund government spending. There is are number of problems with this approach – first, beer and cigarette taxes tend to hit those on lower incomes the hardest. Their suggestion to increase the tax on cigarettes by three cents per stick sounds harmless. However, the effect is an increase of around $1 per packet. With about 1.5 million smokers, that is effectively 1.5 million dollars taken out of the economy – each day.
Can our economy afford that at present? I think not. The 1.5 million would be better off going through the cash registers of local businesses, keeping people in jobs and keeping the economy moving.
Once we start to come out of the recession, and once we need to start cutting the federal governments budget deficits, that will be the time to increase these taxes.
My question is – when will we get a federal opposition that really is thinking of Australia’s future rather than their own? Right now, Turnbull and his team of negative pollies are doing neither!
On the other hand, trying to spend your way out of it like they’re trying to do here in the UK also seems wrong – if you’re over-extended on your credit card and go for financial advice, the adviser is unlikely to tell you to go out and get another credit card. Yet that seems to be the government’s strategy. Personally I think Gordon Brown bears a lot of responsibility for the mess we’re in anyhow.
The government really try their best to outcome this global recession. As far as i know most of the First World countries suffer in these global crisis. So if the government proposal to increase their tax collection just to compensate the large budget deficit due of recession.
I’ve never understood how taking money out of the economy can help when the economy is hurting. And raising taxes on businesses, who are the ones who provide jobs, is just backwards and stupid during a time when people NEED jobs. Tax increases are power grabs by politicians.
You know, there is a simple solution to the ciggie tax, everyone could just quit smoking to spite the government! which is exactly what we are in the process of doing
Isn’t it sad how our economies are ruled by a child’s game known as Chinese Whispers. On the say so of one person, we are thrown into an economic crisis that is beyond even my understanding.
Our pollies are still pushing money into defence and still taking it away from education and health, which is where we need it the most. If there is no health and education, then who is going to be left to defend?
Ah =- but here is the rub – if we have a great health and education system then we are going to need a good defence system to keep the rat bags away. With a lousy health and education system no one will want us so we wont need a defence system.
You’re right about that, it doesn’t make sense to take money out of the economy at a time like this. On the other hand, the government needs to do something and they can’t do anything if they don’t have any money.
Hi,
Very nice post.
Thanks for sharing such a interesting post.
Raising taxes is never good for the economy. Universal Healh Care will raise taxes drastically on the middle class voters Hillary and Obama are courting. How is this policy good for hard working Americans. The only people I think it’s good for is non-working Americans. People who pay no taxes have more benefits than those who do under Liberal programs. How is that fair?
How does the largest decrease in taxes in the last 30 years equal a tax increase?
Most people have seen a sharper reduction in their total tax load in the last four months that Ronald Regan could deliver in 8 years.
To say something different is to be willfully disingenuous.
The real debate here is whether or not we think poor people should be helped financially in order to reduce the gap between the rich and the poor, or if we think it’s fair that millions of working people don’t have the ability to get the medical care that they need. It’s a question of personal moral perspective as well as our opinion of the government’s responsibilities. I think that if raising my taxes slightly I will be helping people get proper medical care, then that is my contribution to society’s well being.
Excellent observations and you have a great way of expressing things. Thanks for this.
And to top it off, the number of H1N1 cases in Australia is rising.
I guess it’s common for some politicians to only think of themselves. That’s just the effect of power on some people. Hopefully, Australia and other countries for that matter survive the presence of leeches like these politicians.
Hi,
The real debate here is whether or not we think poor people should be helped financially in order to reduce the gap between the rich and the poor.
Our policies are still pushing money into defense and still taking it away from education and health, which is where we need it the most.
Thanks.
I have to agree with you Les. Raising taxes in this time of recession will put Australian people in down. They can’t just think of other solutions that may not merely affect the people. Most politicians are using their power for personal gain and not for the people so they can’t blame us of not trusting them.
Hi,
What they are doing.I don’t think that is right move increase the taxes in the recession is wrong.They didn’t think about the common man.
I totally agree with you! I am a Dallas Realtor and with the economy & the real estate market, I’m getting hit with higher tax and nothing for a paycheck!
Never came across in my mind that idea. Taxes makes people more problematic. The government are finding ways to earn money to support their “so-called” projects but never realized how burdensome to pay taxes. Taxes are killing us.
Whats the good word Mate? Very Good blog here mate…You australian?
Hi,
The government really try their best to outcome this global recession. As far as i know most of the First World countries suffer in these global crisis.Yet that seems to be the government’s strategy. Personally I think Gordon Brown bears a lot of responsibility for the mess we’re in anyhow.
Thanks for sharing information.
This won’t help the economy for sure. The people will spend less.
Excellent observations and you have a great way of expressing things. Thanks for this.
You know, it may seem a little bit crazy but it may just work.
There are a lot of people in the camp that believes that a raise in Taxes to benefit social programs will help pull a country out of a recession.
That said – it seems to work best on paper.
thanks for the post!.. very interesting comments.