Swan’s irresponsible budget leaves nanny state untouched, passes the buck to Reserve Bank
letter published in The Australian Financial Review, 12 May 2011
While the Government claims it will return to surplus in 2012-13, the budget fails the most important economic test by providing for a deficit of 1.5 per cent of GDP in 2011-12 in circumstances where it needed to make room for the expansion in mining investment. It is almost unbelievable that the net effect of policy decisions is to actually add to the deficit next year.
Almost as bad is the claim of $22 billion in gross savings over the four years to 2014-15. This includes a saving of $7 billion in the mysterious category of “Other” where no detail is provided of what is being saved and in net terms it amounts to less than 0.5 per cent of GDP over the four years. Examination of the identified gross savings indicates that, while real expenditures are estimated to grow within the 2 per cent pa cap, there will be very little reduction in the type of expenditures that reduce individuals’ reliance on government.
In sum, this is an economically irresponsible budget that leaves the nanny state virtually untouched.
Des Moore,
Director, Institute for Private Enterprise South Yarra Vic