The budget is not an economics budget, it is an ideology budget.
First there is no budget crisis.
Australia has the third lowest debt to Gross Domestic Product ratio of all the OECD countries, so therefore the whole world must be in a budget crisis? But no, our government wants us to believe that we are on par with the PIGS that have more debt than GDP, and are now wanting to implement austerity measure similar to what they were forced to ( Which has not improved their bottom line)
Australia still holds a AAA credit rating, the highest possible. This means the fascist bully boys that make these decisions regard Australia to be in the best possible position to service the debt. Obviously these custodians of the capitalist system don't see Australia as having a budget crisis.
This budget is designed to cut consumption. Peter Costello whom was a very competent (at least) treasurer ha warned in the dangers of this. yet abbot has said that is the intent.
Everything about this budget is calculated to boost the long term strength of the economy; spending less on consumption
So what he is saying is that he does not want consumers to spend, and who does this hurt?
Primarily small business, but equally as important, the government. Costello understands how important consumption is, after all his government became the highest taxing government in our history due to the introduction of a consumption tax.
But Mr Rabbit doesnt want consumers to spend money, so small business, (as will some larger ones especially in the retail trade) will suffer, many will go to the wall. This will result in many many less jobs being available, so more people in the short term on welfare, while the governements main source of revenue will decline. Every time money changes hands the government gets 10%. when a consumer goes into a store,(except supemarkets, mainly owned by one of two large corporations) the goverment gets 10% of the money that changes hands and the remainder goes towards the owner and/or the employees, who then hopefully go and spend that money somewhere else, and the cycle continues. The more money changes hands the better it benfits everyone, the government included
Abbot wants to break that cycle. It makes no economic sense.
On the other hand they are falling head over heels to approve large projects, by in part reducing the importance of environmental impact in approving.
$400 m worth since the election.
Now, who does this benefit? Large business of course.
Naturally this will create some jobs, but remember MR Rabbit doesnt want these people to spend their wages, so the overall benefits to the economy (and therefore government revenue) are not that great. when you take into account that many of the corporations undertaking these projects are at least partially intentionally owned, so therefore a lot of the money will leave the country (unlike when small business are flourishing), which again has very little benefit to the economy.
This falls right in line with who the budget hurts the most, the smaller battler, while looking after the big end of town, which is pretty much the ideology of the liberal party.
It is not a budget based sound sound economics ( as Costello has pointed out), but one based on Mr Rabbits Tea Party ideologies
As for people complaining about negative gearing, obviously they are unaware of the what happened when Bob Hawke scrapped it.
The arse fell out of the construction industry, lots of lost jobs and it pushed the price of housing up.
A shortage of rental properties, which naturally pushed the rental prices ups.
A double whammy and nowhere to hide ( or live) Aren't the mechanisms of supply and demand just wonderful?
No wonder they reinstated it, and it's unlikely to be scrapped again. Someone has to build the houses for people to rent, and negative gearing provides an incentive for this to happen. Remove it and those with money just find somewhere else to invest, and those who can least afford it find it harder to put a roof over their head.
