When will the next Australian election be?

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I’m hearing from the hill that the conversation has turned to an October 2012 election … sportsbet is making it ~27% chance (see below).

This makes some sense to me. A number of things are pointing to an election in the near term. A key reason to go early is to avoid the November/December MYEFO (though the Government will still have to release the PEFO).

The decline in the price of Iron Ore is going to take a hunk out of the budget. The problem is not just the 2012-13 surplus (which is surely now gone) but that the 2013-14 budget surplus is also slipping away.

I doubt we’ll see much earnings growth across the 2012-13 and 2013-14 financial years … and without that i cannot see the growth in company tax receipts, super-tax payments, and capital gains tax payments that the budget is relying upon. Maybe we’ll get some income tax growth …

The other reason an election in Q4’12 makes so much sense to me is the timing of fiscal policy — the pre-payment of carbon-tax compensation in Q2 and the tax cut all the non-Qlders got as the Qld flood levy rolled off in Q3 means that fiscal policy swings from modestly supportive in H2’12 to sharply restrictive in H1’13.

According to the IMF, the cyclically adjusted tightening is ~1.75ppts of GDP in both calendar year 2012 and 2013 … so right now it feels as good as it’s going to get for the next year.

The ALP has had a bit of a bounce in the polls, and fiscal policy is as supportive as it’s going to get. The longer they wait the greater the risk of the blown-budget being exposed (not that it was ever a smart policy) and that the fiscal stance starts to annoy voters (as it is doing in Qld).

This way, at least, Gillard is sure to lead the faithful to the polls …

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9 comments

  1. Perhaps prayers can be answered after all. I think the reasoning advanced is sound and apart from what is pissing off the Queenslanders, at least 60% of the Australian electorate (in totum) has had as much as they can take of this moronic woman, the toadies that surround her and the imbicilic independents who have been propping her up. October would not be soon enough for us.

  2. Just straight after people have received their carbon tax-boosted winter energy bills…

    Still, it’s hard to see how they’re going to spin the Budget outcome if they go full term, which they’ve tried to do thus far and have looked pretty silly doing. I notice that The Kouk is still keeping the faith on that front. I guess the first step is always convincing yourself.

  3. A PM only calls an early election if they believe they can win.

    I know Gillard is advised by the poorest advisers we have ever seen politically ( evidence: only 35% of people understand interest rates are LOWER than they were when Labour won.)

    Perhaps if she had advisers of the quality of the Kouk it may well be possible but not at present.

  4. P.S. the latest Government Financial figures do not bear out your pessimism.

    Income tax receipts are quite reasonable at present.

    An election held before MYEFO BUT PEFO must come out.

    You sure you aren’t from the NSW right???

    1. haha, not a chance. I did say that they would still have to release PEFO. I think there’s a logic to the story. Tingle’s heard the same.

  5. PEFO is a more exacting document than MYEFO as it is directly from Treasury. MYEFO is not.
    On a change of Government they get the same figures again from Treasury but also advice!!
    There is no advantage.
    Chris Richardson has said they can still get their ‘surplus’ through accounting sleight of hand(s) and for once I would be happy with that.

    I do not want to see contractionary economic policy IF the economy is starting to slow.

    if the world is slowing then do not follow Germany’s advice as it appears they are now getting the economic slowdown they were always going to get given what they advocate.

    1. In theory but since when has Tsy put out a PEFO at odds with govt?

      Both Swan and Costello released budget updates just before election to force Tsy hand. I’d say they could do same by releasing MYEFO early.

  6. if you were to peruse them carefully you would note a few discrepancies.

    Not a lot because no government is going to tell Treasury to to make up fairy stories

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