One of the features of Wayne Swan that constantly surprises me is his belief that he is still campaigning against John Howard and Peter Costello. Here he is again this morning in his tax speech:
One of the key things that this analysis shows is that our predecessors embedded long term structural damage to the budget that we have been working to address and will need to continue to do. We have already taken important steps to improve the sustainability of the revenue base.
In fact the analysis does not show that at all. Treasury analysis shows that the Howard / Costello budgets were almost all in structural budget surplus.
But putting that aside. What is the political benefit of attacking Howard and Costello?
Right or wrong, Howard and Costello are commonly seen as good economic managers, why wouldn’t you want to be associated with their legacy.
Peter Beattie is a much smarter political operator. He went out of his way as Premier of Queensland to be associated with Joh, even though just as many have Joh-derangement-syndrome as have Howard-derangement-syndrome.
He knew, however, that Joh was a hero to many mainstream voters which any political party has to win over to win elections.
Wayne Swan either doesn’t realise this or is too full of hate to put his own interests above his own bile.
Peter Brent (Mumble) at The Australian often comments on the political stupidity of Wayne Swan (and Gillard).
“The Australian often comments on the political stupidity of Wayne Swan (and Gillard)”
I would be surprised otherwise. But can’t be that stupid if they are where they are.
Almost all. It deteriorates near the end just when the commodity boom hit us.
Moreover the structural surpluses are explained by those factors that Romer has shown to bias these measures upwards. An increase in share market levels leads to high levels of capital gains.
They also gave us the Costello curse. Income tax paid by assumed perpetual company tax collections.
If the Terms of trade ever fall to levels of the 70s in a hurry then the budget is in a lot of trouble.
Finally if Costello ever had the revenue levels of Swan he would have had deficits!
That said Swan is a very good treasurer possibly the best the nation has had but a very poor politician
or to put it another and more accurate way.
A structural surplus doesn’t add to GDP growth however Costello’s last few budgets did whereas this current budget and the next one will detract from growth.
The 50% CGT discount, the ability to carry forward capital gain losses, combined with the ability to negative gear investments is diabolic. It’s the classic short term solution. It works only if asset prices continuously increase. The govt is sharing the risks with the investor.
Now the stock market is still almost 30% down from peak and house transactions are about the lowest in 10 years.
The only solution for the govt is to reflate asset prices with various grants, but that only delays the issue further.
Costello increased middle class welfare too much when the Mining Boom Mk 1 was bringing in tons of revenue. That is only one component no doubt of the structural damage they did to the budget.
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