Comments on: Surplus of fashion risks economic growth.

By: countryboy

countryboy — Tue, 22 Jan 2008 14:08:36 +0000

“It’s time to lay down the law to the Reserve Bank and take evasive action.”
What evasive action are you talking about? Australia is still in the middle of a 15 year expansion. A declining economy is not the problem here (at the moment). Share market panic and a credit crunch in the US will have an effect here but not much beyond a slow-down in growth. Big-spending will only result in a stagflation situation – declining growth and increasing inflation.
The bigger issue with budget surpluses is that it indicate that we are over-taxed, including businesses. It’s a transfer of wealth from private to government hands. The government should be running a zero deficit/surplus budget at the moment and use lending to increase spending when/if required.

By: Des Griffin

Des Griffin — Tue, 22 Jan 2008 11:36:31 +0000

This is a good post!
I am very bothered that the surplus is the focus of attention, not least because of the impact on the provision of social infrastructure (though Rudd keeps talking about productivity and infrastructure bottlenecks).
To the extent that there is an attempt to restrain inflation (and I note and agree with the fundamentals in your post on this – in difficult times don’t be restrained), I thought it had been made clear (by a former Reserve Bank Governor) that it was the tax cuts which were particularly fuelling the increase.
Richardson from Access Economics issued a statement some weeks ago which mentioned tax cuts and their contribution to inflation but then on the 7:30 Report Ali Moore “trapped” him into trying to work out how much the cuts to the budget would have to be to restrain inflation. He was at it again last night. (This is the man who said there was a statistical correlation between individual contacts and productivity!)

By: Graham Young

Graham Young — Tue, 22 Jan 2008 09:39:04 +0000

That’s my point Guy, if they preside over a recession because they are trying to keep financial markets and commentators happy, punters won’t reward them as good economic managers! Voters aren’t interested in the government’s surplus, they’re interested in their own!

By: Guy

Guy — Tue, 22 Jan 2008 08:07:20 +0000

I think its early days yet – but clearly Rudd and his team are very keen to establish their economic credentials early, in a way that the average voter understands. This mindset will probably gradually drift as the new government gets more confident and the public no longer associate the economic bogeyman with the Labor Party.