IT’S TIME TURNBULL GAVE SHORTEN A WEDGIE
... and appeared to be economically responsible at the same time
Four-time Walkley Award winning political commentator and Churchill Fellow, has returned to the fray over concern that the integrity of news dissemination is continually being threatened by a partisan media.
Bill Shorten only indulges in the politics of opportunism and there are more serious issues afoot than his lousy poll figures compared to Albanese's. Treasurer Morrison and Turnbull should present a Bill (hidden among their omnibus of Bills) legislation that outlaws deficit spending. If passed, it will not immediately repair the debt but will stem further deficit blowouts that appear certain during this Parliament.
Of course it’s unlikely to pass but, because it would have so much community support, Shorten and his Greens would suffer substantial political damage. If they reject the legislation it would stamp Labor/Greens as having no future intention to repair the debt and deficit. We all know that is quite true, but at the moment they are hiding behind a veil of so-called “budget fairness”, yet Shorten would have trouble spelling the word “fairness”.
It’s a game of wedge politics and I doubt Turnbull has the wit to play it as cunningly as Shorten... or whether he actually wants to. Morrison is serious about debt and deficit and he can play the game with deft skill... but only if allowed.
Outlawing deficit spending cannot be left to a regulation that an incoming Labor Government would quickly reverse. It must be enshrined in law and it must apply to Parliament.
The law would save our triple A rating and put Australia at the forefront of international fiscal responsibility. If certain insolvent members of the EU had been made to pass a similar law in exchange for bailouts, the EU would look very different today.
The legislation would simply mean that government expenditure cannot by law exceed government income.That shouldn't be too hard! Of course Shorten would object, so what? Let him have a 10% overspend under certain economic conditions, that amount can be handled, but it will expose Labor/Greens as the spendthrifts they are, and will label the Libs as prospectively responsible economic managers, if only the profligate Left would allow them to be.
A ban on deficit spending could easily be amortised and aggregated over the four years’ forward estimates. And “off-budget” expenditure of tens of billions like that of the disastrous NBN, would not be permitted by dumb people like Rudd and Swan without domestic financial backing and/or partnering, thereby ensuring a degree of legitimacy and at the same time paving the way for a sell-off on completion.
A deficit spending ban forces governments including Labor/Green and crossbenches into cutting costs that have ballooned under both governments in the wake of a mining boom Labor thought would never end.
And God knows cost-cutting right now is the most fertile area for savings in Australia’s history.
In the United States, every State, other than Vermont, has a balanced budget amendment, which prohibits deficits under normal economic conditions. The Federal Government has no such amendment, thus their $20 trillion blowout is not only an economic problem but has become a foreign policy problem, particularly in relation to China.
Australia has no such deficit restrictions on either State or Federal Governments.
In the final analysis, a balanced budget will actually cause Net Domestic Income to increase by an amount equal to the government spending! This will be the result regardless of the amount of the budget, or of the marginal propensity to consume.
[Sorry if all this sounds a bit complicated but if you are interested in pro- or anti-Keynesian economics, search for “The Balanced Budget Theorem”. It’s theoretically fascinating.]
Shorten has made an art form of wedging the Libs, so here’s a chance for Turnbull to reverse the tactic while boosting his credibility, but will he take it?
Like all the other stuff that makes economic sense, it will get stuck in Turnbull's too hard basket.