The Write Direction: Budget Bonking

THE climate for compiling the present Federal Budget could best be described as “far too many people spending money they haven’t earned in order to buy things they don’t want, in order to impress people they don’t like”.

So, how do governments handle this issue we call inflation?

Another fact of economic life says “you cannot legislate the poor into prosperity by legislating the wealthy out of prosperity”.

The wealthy are obviously those taxpayers that own or are paying off their homes.

This could be the governing reality why the Budget has given every homeowner a $300 energy bill rebate.

I find it most interesting that every expert espousing a view on the Budget has failed to think back to this time last year.

The government declared at that time that every consumer of electricity should expect their electricity bill to fall by $275 this year, only to experience continuing increases to their quarterly electricity costs.

The opposition and every pundit has continually hit the government over the head during the past year for this failed prediction, so it was imperative that the government solved this issue as quickly as possible.

Of course, a $300 cash handout from this budget should solve the community’s rage over the increased cost of electricity, so the government can now say their prediction was correct.

It is hard to say that none of these handouts are politically motivated, but the additional ten percent rental subsidy was presented as another attempt to provide those struggling with the ever-increasing cost of renting a home – a short reprieve from the reality that as the cost of home ownership increases, so must their return from rental income increase in order to stay on top of those increased costs.

Again, in reality, the ten percent increase will do little other than allow rental homeowners to seek a further increase in rents.

Who remembers what happened to the cost of solar panels on the roof when that government decided to heavily subsidise their supply and fitment?

Please don’t take me back to the scandalous pink bats days.

So, what is good about this budget?

Clearly the production of a $9.3 billion surplus/profit for this year is an outstanding result and it follows on from a $22 billion surplus from the year before.

The Labor Party has been criticised for most of my lifetime as the party of big expenditure and no economic success, but these two surpluses must help in reversing that view.

This now poses the question of what happens to those surpluses?

Were they used to reduce Australia’s debt from previous borrowings to get us through the tough years of Covid, economic inactivity and the jobs saver schemes?

I certainly hope so, but no clear direction has emerged.

The largest costs for running Australia are defence, social security (especially for our ageing community) and the NDIS, which looks like the real elephant in the economic room.

This is where the money is projected to be spent and this translates into deficits or losses for at least the next five years.

People should be well informed not to expect future handouts and be further unsettled by government expressions that their intention is to have the economy grow faster than future expenditure.

My understanding of economics and budgets suggests to me that a far better policy might be to find out what your income is and then not spend in excess of that amount.


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