Wednesday, May 14, 2008

No Surprises Here

After all the dire warnings of painful expenditure cuts, the federal budget seems rather tame now that it has arrived. Wayne Swan promised there would be no rabbits pulled from the hat and he has been true to his word. About the biggest surprise on budget night was the snappy blue and white striped tie worn by the treasurer. Very conservative and very reassuring, much as the budget itself was intended to be.

The opposition has been claiming that the budget is high taxing and high spending, but in terms of it’s proportion of the overall economy that’s just not true. It seems that there really isn’t much for the opposition to criticize, so it has been reduced to those jingoistic claims and bleating about the plan to means test the baby bonus.

Meanwhile, in the rest of the community, the most serious critique has come from those who worry that the fiscal discipline imposed to contain inflation may not have gone far enough. The much publicized pain has turned out to be quite minimal, while lower to middle income earners will have their tax cuts delivered as promised. The risk remains that inflation won’t be brought down by this budget, and if that’s the case those tax cuts will dissipate in the face of rising interest rates.

Elsewhere, some wish lists remain unfulfilled, such as comprehensive dental care, a better deal for aged and disability pensioners, and targeted programs for rural and indigenous health.

On balance, this is a remarkably conservative budget, and if anything that is the only surprise. Some might have expected the cuts to run a little deeper, the initiatives to be a little bolder, and the decisions to be a little braver. Only time will tell if the right balance has been struck.

Apparently Kevin Rudd was serious when he claimed to be an economic conservative.

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