Stimulating the economy? Or buying votes? The taxation double dip!

Stimulating the economy? Or buying votes? The taxation double dip!

Like teenagers who just received their first credit cards, Kevin Rudd and Wayne Swan have collectively joined Australian state and territory governments with a deficit budget (once approved in the Senate). To put this into greater perspective, the NSW government (Fort Crumble) has been broke for years despite record tax receipts and yet infrastructure maintenance remained all but non – existent. With world leaders announcing stimulus packages (and I agree we need them) let’s not camouflage these massive fiscal announcements under the guise of combating the Global Financial Crisis (GFC). The problems in NSW (and the other states and territories for that matter) happened well before the GFC.

Last Friday, I read with interest an article on by John Hewson – economist and former Liberal party leader titled “Hewson : we could see an election this year” where in part he made the following comment “At best, the Rudd Government’s second stimulatory package will just buy some time — simply delay the inevitable. As long as the global recession continues to deepen and, as a consequence, China’s growth continues to stall, the best Rudd can hope for is to hold up consumer spending by the cash handouts sufficient to avoid a technical recession — namely, two consecutive quarters of negative growth. “The plot this week began to thicken.

Ross Gittins from The Sydney Morning Herald filed this week an article titled “With best intent, politics intrudes” A great read so here are the first nine paragraphs “Kevin Rudd has long been afraid the downturn in the economy will cost him re-election, making his Government a one – term wonder. Malcolm Turnbull knows the downturn offers the best chance he’ll get to defy history and win the election, thus securing his own leadership.

These never – to – be admitted truths explain the political games both men are playing over last week’s budgetary stimulus package, even as the economy burns.

If you want to understand what’s happening in the economy and the rights and wrongs of economic policy you have to be able to distinguish between the politics and the economics. But that’s not easy because the pollies are always trying to disguise their political motives as economic.

Whatever successful politicians do or say, the political implications of what they do are never far from the front of their minds – even when they’re doing just what they should be doing in the nation’s interests.

As part of his long-running efforts to ensure he doesn’t get blamed for the recession. Rudd has repeatedly emphasised how bleak the news is from overseas and how badly it will affect us. It’s true, of course, but saying it is so often and so forcefully risks adding to the blow to business and consumer confidence.

Rudd hopes he can escape blame for the downturn provided he’s seen to have done his best to respond to it. That’s partly why he keeps popping up every few weeks with another measure to counter it.

Even so, mainstream economic gloom-from the International Monetary Fund to the Australian Treasury and most macro-economists – has been urging the Government to use the budget to stimulate demand, to make the stimulus big to get it happening as soon as possible.

It needs to be big because the global recession is expected to be so severe, it needs to start as soon as possible because getting in before the economy starts unravelling will be more effective.

Of course, the need for haste doesn’t justify Rudd’s attempt to push the legislation through Parliament in just a day or two.”

Back to the thickening plot of Rudd’s early election (alleged) plans. So this investigative agent went off to The Tally Room where he found that the Queensland Labor government must call a state election by September 2009. This is to win a fifth term where a loss would seriously impact what some media outlets are already calling the “Ruddslide”. A clue: infrastructure spending to improve state government perceptions for approval levels, maybe re-election?

Then the clanger in yesterday’s Daily Telegraph with the headline “Protect Rees, Rudd tells Labor MPs” I loved this – “Labor Party bosses have been ordered to protect Premier Nathan Rees from a leadership challenge and “calm down NSW” to allow Kevin Rudd to call a possible early election in the second half of this year.

Oh dear – what extent some individuals will go to, to preserve and stroke their suffering egos. A case of once bitten twice shy? Maybe a case of Sunrise to Sunset!

Next week, we address the amendment to Land Tax legislation where the Premier Nathan Rees introduced his premium rate and investment property owners had the current rate of 1.6 per cent increased to 2.00 per cent for investment properties valued over $2,250,000.

With GST receipts already down by approximately 40 per cent, the elected governments simply increase taxes which results in businesses reducing staff.

Nine years on – it is now revealed that GST has increased taxes NOT reduced them. The platform was fraudulently sold to the voting public.

The GFC did not help – however State governments are just as bad, even worse. They escalate the financial remorse for taxpayers and it will only get worse.

A hard week for all Australians, especially those involved in the tragedy of the bush fires in Victoria. We have placed a link on our homepage for those who wish to contribute.

Cheers ^__^

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