Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

A Maggie Thatcher needed to sort out the mess

By Paul Kerin - posted Tuesday, 12 May 2009

The Rudd Government's early complacency, which soon morphed into panic, and its ongoing pandering to vested interests will destroy voters' faith in its economic management credentials.

Today's budget will hasten the destruction. We'll soon be pining for a Margaret Thatcher type to fix the mess.

I've always voted Labor in federal elections. But I voted for former Liberal leader Jeff Kennett twice in the 1990s, following Victorian Labor's gross economic mismanagement. I'm glad I did. Many Victorian traditional Labor voters did likewise.


When governments fail miserably, many voters bring themselves to vote for tough leaders that they wouldn't stomach in normal times.

We'll soon need a Thatcher, not to mend the holes in the revenue roof but to toss out the garbage that's come through the front door. Labor inherited plenty, but it has piled more on.

Last May, Labor delivered in it 2008-09 budget. During the election campaign, Lindsay Tanner (now Finance Minister) correctly said the Howard government's spending was "drowning in fat" and displayed "drunken incontinence". Kevin Rudd promised to take a "meat-axe" to it.

Yet Labor cut only $5 billion - a mere 1.8 per cent - from Howard's 2008-09 plans and added new spending of $5.1 billion. It projected real outlays to rise by 9.6 per cent over four years. Not a cracker saved.

Helped by favourable changes in economic parameter assumptions, the budget projected a cumulative four-year cash surplus of $79.2 billion, with net debt amounting to negative $106.7 billion by mid-2012.

Since then, spending has skyrocketed and projected receipts have plummeted. The Government's February update forecast a $118 billion cumulative deficit, with net debt reaching positive $69.6 billion. It is perfectly sensible to run deficits during downturns, but this Government has grossly overreacted.


Of the $44.2 billion turnaround in the 2008-09 cash bottom line (from a $21.7 billion surplus to a $22.5 billion deficit) forecast in February, $29.1 billion was policy-driven. Of the $197.3 billion four-year bottom line drop, $68 billion was policy-driven - including the $10.4 billion Economic Security Package, $15.2 billion COAG plan and $41.6 billion Nation-Building Plan.

Recently the Government upped the four-year tax receipts loss from February's $115 million to $200 billion.

It has announced substantial further budgetary hits, such as up to $43 billion outlays on the national broadband network and cuts in emissions permit sale proceeds.

  1. Pages:
  2. Page 1
  3. 2
  4. 3
  5. All

First published in The Australian on May 11, 2009.

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

27 posts so far.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Professor Paul Kerin teaches strategy at Melbourne Business School.

Other articles by this Author

All articles by Paul Kerin

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 27 comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy