Swan to build surplus as economic stabiliser

Written By: - Date published: 3:44 pm, February 12th, 2008 - 2 comments
Categories: economy, International, tax - Tags: , ,

Australian Treasurer Wayne Swan has announced that he intends to lift the target for the budget surplus, so that fiscal policy can help ease upward pressure on interest rates. He will proceed with tax cuts announced in the election campaign, but according to The Australian newspaper his comments signal that there is unlikely to be any further tax reduction.

Mr Swan said that the budget should be allowed to provide an “automatic” stabilising of the economy by building up much larger surpluses during the current boom conditions… Reserve bank minutes from November show that its board believed the previous government’s pre-election spending had neutralised this stabilising function of government policy.

Mr Swan said budget policy had been too lax under the previous government. Its spending had focussed on putting dollars in people’s pockets, boosting demand, rather than investing to raise the capacity of the economy to supply.

Once again a Labor government has had to fix the problems caused by the fiscally imprudent governments of the right. Whoever leads the Democrats will have to do the same for the US.

How ironic that because New Zealand has had a fiscally prudent Labour Treasurer in Michael Cullen, he is now able to offer sustained tax cuts without destabilising the economy. Swan is doing in 2008 what Cullen and Clark did in 1999, and New Zealand is much the better for it.

2 comments on “Swan to build surplus as economic stabiliser ”

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  1. Kimble 1
    13 February 2008 at 12:38 am

    “he is now able to offer sustained tax cuts without destabilising the
    economy.”

    That is just fucking deluded. The economy is no better now to handle tax cuts then it has been in the last 5 years.

    Australian Labor would be embarrassed that you are comparing their economic nous with New Zealands Labour.

  2. AncientGeek 2
    13 February 2008 at 10:49 pm

    That is an interesting post. I suspect the government in aussie is starting to get ready for the downturn in commodity prices for minerals. It has been pretty apparent that the extraction industry has been holding up the aussie economy for a number of years, especially bearing in mind the drought there.

    I’ve been wondering for a few years now about the impact of balancing act between slowly decreasing rates of population growth (the velocity of increase is slowing) and the steady rise in living standards in some of the more populous nations. The question in my mind is if the rate of standards increase is enough to offset the speed of population increase.

    My favorite site wikipedia now has a good chart on World population estimates. It is interesting to see that the 2050 estimates are starting to converge. But what I need is a chart showing the rate of change – looks like this is the easiest – shows years between each billion.

    Looks like we are starting to peak off. People don’t really seem to understand how unique the period of my lifetime has been economically. That rate of sustained population increase affects all of the economics of the period, and it is about to change.

    I’d pay a bit of attention to mineral futures, as that should show the trend first. I think that aussie is still our biggest customer for manufactured goods

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