The Australian Budget looks set to be a very traditional election budget.
So much so that market implications will be limited to entirely muted.
There will be lots of very good initiatives that we look forward to hearing. The overall thrust of the Treasurers comments however, are about temporary cash handouts for rising costs of living and new infrastructure spending.
The Australian economy did very well during Covid, because the Government provided more stimulus per capita than any other country in the world. While Australia experienced the lowest Covid case load. Combined with the Reserve Bank being incapable of anything it seems, rates have remained at historic crisis levels when there has been no lasting economic crisis？
As a result we are seeing a steadily rising inflation flood. It will just keep coming.
The world is in the midst of a full blown inflation crisis of historic proportions. We will have that global tsunami hitting our shores too. Some commentators think food inflation will not hit here, but competitive pricing demands from elsewhere in the world, as shortages grow, will most definitely impact prices at the local store.
Rampant inflation, as the economy slows post a huge surge in stimulus bringing forward of economic activity is the biggest challenge facing our nation.
The old election budget approach of temporary cash handouts and promises of big infrastructure projects may not be what the country requires. There is no doubt welfare recipients desperately need significant and permanent increases in allowance levels. Infrastructure spending is required too. But where is the answer to what will be a much tougher global economic environment over the next few years. Due to the supply of energy and food disruption out of Ukraine and Russia.
Australia is not insulated from a slowing global economy. This is a time to be internationally competitive like never before. This budget should be about major reform to reduce taxes and regulation so as to activate the latent potential of many working Australians who cannot climb through the harsh regulatory ceiling that now blankets the nation.
Australia will need to be a much stronger nation in the years ahead than it is now. We need all of our talent realised.
Simplification of the tax and regulatory environment should be the focus of this budget.
What we will get is more of the same. More of the same just isnt good enough.
It remains to be seen if the Federal Budget can achieve its objective of keeping the government in power.
Voters may actually be looking for some new ideas, given the ordeal of the past two years.
