For the first time in decades, Australia will go to an election with neither of the major parties offering tax cuts. In fact, both will take a new tax to the polls in the form of a levy to fund the national disability insurance scheme.
Pre-empting the end of the resources boom – and two particularly gloomy economic reports out this morning – Joe Hockey used his budget reply speech yesterday to temper expectations with reality. "The starting point," he said, "is we can’t provide additional personal income tax cuts until the budget is fixed."
The confession is at odds with the promises of Tony Abbott's "Real Solutions" manifesto – although both the Opposition Leader and his Shadow Treasurer are increasingly cautious (see also: realistic) about economic commitments.
Writing in the Australian Financial Review, Mark Latham sees the Opposition's response to the budget as proof the 40-year war on big government has been lost – that the Coalition now broadly supports social welfare. "Abbott had a chance to set out an alternative vision for smaller government, to roll back the welfare state… (his) budget speech was a 30-minute exercise in white-flag waving."
Australia’s 28th Prime Minister might be a DLP Prime Minister yet.
"The nation's finances are facing a deep structural challenge that could turn Labor's promised budget surplus into a $20 billion deficit, as economists warn that further tax hikes and spending cuts will be needed to bring the accounts back into balance."
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"Making the traditional budget reply speech to Canberra's National Press Club on Wednesday, shadow treasurer Joe Hockey cited a complete loss of faith in the government's official numbers as justification for not specifying detailed spending and savings plans until the election campaign. In their place, he offered a feeling: 'I think if there is a change of government on 14 September there will be a surge of confidence. I believe that in my heart.'"
"Australia’s 40-year debate about the role of government ended last Thursday when, in his budget reply speech, Tony Abbott conceded defeat. After three years of grinding negativity about Labor’s policies, especially the scale of government spending, Abbott had a chance to set out an alternative vision for smaller government, to roll back the welfare state. Instead, he rubber-stamped most of Labor’s measures and added his own burst of profligacy."
"More than a dozen years after his 'fundamental injustice' rant, it was Rudd's cowardice on the GST, rather than the tax itself, that is likely to be remembered first... Labor's tendency to surrender before the first shot was on display again in late 2011 when Julia Gillard and Swan ordered another review - specifically addressing the GST but, again, ensuring it had no authority to examine the tax's actual performance."
"Today's decision will put the spotlight once again on the future of the Australian car industry, and taxpayer assistance for the sector... Over the past decade, Ford and its rival GM Holden have shared in more than $12 billion in taxpayer-funded industry assistance. The Coalition has vowed to put more constraints on car industry grants if it wins office."