And the losers are…

With the partial exception of Stephen Kirchner, the government’s spending-the-surplus extravaganza is receiving a positive reaction.

Yet there has been very little about what was going to happen to the surplus, particularly the planned contributins to the Education Investment Fund and the Health and Hospitals Fund. One of the Prime Minister’s media releases yesterday referred to speeding up spending from these funds, but this seems to be a separate issue from how much money will eventually find its way into them.

On that issue, the amount contributed to the special investment funds was to be ‘subject to final budget outcomes’, so presumably they are taking a double hit: lower surpluses or even deficits in the coming years, and the current surplus spent on handouts to families, pensioners, and home buyers.

It reinforces the need for universities to disconnect themselves from the budget cycle as much as possible, and to receive their income through markets.

11 thoughts on “And the losers are…

  1. The message is mixed. We are supposed to be bracing for tough times (no gilding the lilly). So we rush to spend half the surplus. What if we were looking forward to good times?

    And the home buyers grant? Give us a break, it was over-spending on houses that got us, and even more the US, into trouble in the first place!

    What shall we do with the drunken sailor?
    Give him the tiller!


  2. Though in terms of what they are trying to do – get people to spend – I would have thought that Xmas was the ideal time to hand out the cash. Only the first home buyers handout to people to spend on existing homes seems like a dumb idea, since this will flow through into higher prices rather than greater consumption.


  3. So we get a lift in spending at Christmas.

    And after that … ??

    And the increase in the home buyers’ handout will immediately be capitalised into house prices – just like it was when it was introduced.

    I suspect the best way to increase confidence and spending is to quit the gimmickery and give a permanent and broad income tax cut.


  4. I’ve got four kids Tom and I’m getting nothing. But that’s okay – I get to tell the kids that the government doesn’t love them.


  5. I was watching Question Time earlier until I threw the remote at the TV after watching Chris Bowen criticising what Barnaby Joyce said.

    Apparently giving people $1000 at Christmas time is okay, because Australian families are responsible enough to make smart financial decisions regarding what to spend $1000 on at Christmas time. But Australian families aren’t smart enough to pay for childcare if you give them a tax cut- you need rebates and subsidies to get to them to pay for childcare…

    Get the story right, please Labor, either Australians are too dumb to spend money themselves or they aren’t. Either stop the ridiculous amounts of middle-income government churn or just declare all adults dependent on the government- just give a way out for those that don’t want your second-hand money and would prefer to take care of themselves.


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  7. If it is any consolation Jeremy I think the FHOG increase will more likely go into greater equity requirements by banks. The extension of the payment towards existing homes is stupid though. If there is any justification for the FHOG so long after the GST then it is only to keep the construction industry going. Haven’t seen any figures but anecdotally I get the impression it is bad news.


  8. Well I am not too sure about ‘dear and respected’, but I suspect that given the amount of coal/gas/aluminium etc. flowing out of the sunshine state and ore from the sand gropers, I don’t think kevni is too concerned about this year’s surplus. It will make them look like good economic managers at the mid year review (look, we still have a surplus – even after the giveaways!).

    Like Turnbull though, I would love to see the economic analysis rendering this package necessary.


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