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Article by Cameron Spink
Upon release Wayne Swan's new federal budget was lauded for essentially avoiding past economic upheaval and placing Australia in a position to regain surplus in three years. Political commentator Paul Kelly, from The Age, said as much claiming “Wayne Swan has given Rudd Labor it's re-election manifesto”. While at first appearance Kelly's analysis may appear correct some caution must be given to those voters preparing to either re-elect or deny Labor power this year.
A large amount of the extra funding the government gets to play with is created by the new “super-profits” tax that is obtained from mining companies. This tax will net about $9b per year. This decision has rocked the mining industry and will have ramifications come election day. What is more it has placed the Australian economy in danger as many large mining companies (Xstrata, Peabody etc) threaten to pull out of the Australian market. We need the mining companies swelling our economy more than they need us. Rudd, through Swan, is playing a dangerous game and if it backfires and international mining companies do call his bluff then our economy will have a large financial turn-around.
This is not the only smoke-screen in the federal budget. It also relies on Australian exporting to China. This is dependent upon our relationship with the Chinese government as well as their continuing need for Australian resources. But what is most distressing is Rudd backtracking on so many Labor platforms. The emissions trading scheme is a prime example that has been left out of the budget.
Some commentators have called the federal budget boring and bland. In some respects this is true. No large handouts have occurred and that is rare for an election year. In this way the budget is responsible.
However, this may indeed be a loss for Rudd. If the budget is not a game-changer come election and merely a responsible and bland budget it reflects the Labor government's defensive attitude. A slide in the polls has put the federal government under immense pressure and continuing unfulfilled policies have unbalanced Rudd's re-election scheme. This budget reflects a conservative mindset of a party that know their election ambitions are in trouble.
This budget is not a political win for the government, it is merely a smoke-screen, a budget of distraction.
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