The last time a new government brought down its first budget, in 2014, it was a disaster for all concerned.
Spending was cut by $14.2 billion over four years and receipts were increased by $3.2 billion – an extraction of $17.4 billion out of the economy – and the Prime Minister Tony Abbott and Treasurer Joe Hockey were extracted within 18 months.
Australia’s net-zero commitment has always just been a matter of us doing our part of the global effort.. But that global effort is now in tatters.
On Thursday last week – June 30 – two documents were published here and in Washington DC that together present Australia with a horrible, very expensive problem.
In essence the two documents tell us that Australia will fork out hundreds of billions of dollars to transition the electricity system to near-100 per cent renewables to no avail, and we’ll end up paying even more to deal with the effects of global warming.
With slightly more than one per cent of the world’s greenhouse gas emissions, Australia’s commitment to have net-zero emissions by 2050 has always just been a matter of us doing our part of the global effort – as we should.
But that global effort is in tatters because the Supreme Court has taken America out of the game. Keeping global warming to less than 1.5 degrees above pre-industrial temperatures, and therefore something less than catastrophic, now looks impossible.
That means it is now more important for the Albanese government to develop strategies and allocate funds to deal with impact of climate change than it is to cut emissions, as promised, by 43 per cent by 2030 and to net zero by 2050, as important as those targets still are politically and morally.
It’s now likely that both costs will have to be paid.
The two men running the Australian economy are completely at odds, fighting each other while saying they’re not. The one who is right is powerless, and the one with the power is wrong. Philip Lowe, the Governor of the Reserve Bank, is trying to get wages up, but he can’t. Prime Minister Scott Morrison could get wages up but he is so deep in the habit of suppressing them that it’s an addiction.
The sting is not just in the scorpion’s tail but in its nature.
Since the election of the Whitlam government in 1972, the average tax to gross domestic product ratio during three Labor governments was 20.4 per cent while during the three terms of Coalition government it’s been 22.4 per cent. In other words, Australia’s highest-taxing party is the LNP, quite comfortably.
To be clear: The only reason the Coalition is able to say that it’s keeping the taxation to GDP ratio below 23.9 per cent is because it is running huge deficits.
It is budgeting to finance an average of 4 per cent government spending with bonds rather than tax.
That’s why next year’s budget will have to be brought down after the election rather than before it: They’ll have to get started on the spending and welfare cuts early, and such budgets are always best in the first term, just after an election.
olddogthoughts 
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