Labor in deficit on surplus

On balance Wayne Swan's sliver of surplus spent far more political capital than it saved. Australians have a nuanced view of government spending, understand that times are difficult, and aren't too concerned whether the government achieves a surplus or not.

They do want to see leadership, and they are concerned that a surplus that is achieved by deferral and "chicanery" confirms that the government is weak and more concerned with how it looks than how it performs.

Out of 659 participants in a virtual online focus group held last week only 35% think it is important to achieve a budget surplus next year (and the majority of these are Liberal voters). The other 65% are either neutral or disagree. So a surplus is not that important to voters, no matter how important it is to the Opposition.

Further, a massive 58% of our respondents don't believe that a surplus will be achieved versus only 26% who think it will. This isn't just a strike against the surplus, this is a strike against the credibility of the Treasurer.

Even if a surplus is achieved, it sill doesn't help the government as only 8% said they would be more likely to vote Labor if they actually achieved a surplus while 20% said they were less likely.

The apparent contradiction in this position can be explained in a number of ways.

The political climate has become so polarised that many voters will punish the government even if it does something that they agree with. For example, 24% of those Liberal voters who think that a surplus is a good thing would be less likely to vote Labor if the government achieved this, while only 10% would be inclined to reward them.

Then you have those voters who think that a surplus is unnecessary at a time of global turmoil, so see the attempt to achieve one as political incompetence. Many Greens voters are in this group.

Leximancer analysis of the data shows that voters have a fairly nuanced understanding and are tolerant of the situation the government finds itself in with this response being typical of general sentiment:

"I'm a believer in the orthodox Keynesian view of the macroeconomy that the one of the roles of government is to smooth out the economic cycle: the independent monetary policy setting of the Reserve Bank helps to achieve this, but fiscal policy also has a role to play. If economic circumstances suggest the need for expansionary fiscal policy, the Government should allow the budget to run a deficit."

The issues shaping perceptions of whether a surplus is likely or not include respondents' concerns about the current "situation" in "Europe" and the "world"; a belief that a surplus isn't in Labor's "DNA" and a concern that the figures that are being used are concocted or wrong.

So it is a combination of economic circumstance and government predisposition. They see Australia as a victim of international influences over which she has no control and Labor's reflex to be on the side of looser rather than tighter fiscal policy.

Given the promises Labor has made about returning to surplus, it would be a brave Treasurer who broke them, but it's a breach that voters would seem to understand.

While in general voters expect governments to keep promises, that doesn't hold when they think that keeping a promise would be stupid.

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Comments   

 
0 #1 we can't go on giving away money we don'True Queenslander 2011-12-08 19:17
we can't go on giving away money we don't have and then expecting the workers of Australia to keep paying more and more taxes to pay for the ALP's desire to suck up the UN and all it's many faces, the RBA, WB, IMF, etc. I am also sick of ALP politicians telling us we have tighten our belts in these difficult times while they have their collective noses in the public trough at OUR expense.
 
 
0 #2 This promised so-called surplus is Denis Connell 2011-12-08 20:48
This promised so-called surplus is a sick joke. This fool Swan has no idea what is going on. If he said today is Thursday I would have to check the calendar before I would believe him. There is no way this bunch of incompetent fools will deliver a surplus next year or ever.
 
 
0 #3 Just goes to prove how ungrateful and smSheila Maureen Hale 2011-12-09 02:32
Just goes to prove how ungrateful and small-minded ex-Labor voters are. Since when has the RBA been part of the UN? All the benefits workers now enjoy, superannuation, Medicare, 38 hour week, etcetera were given to them by Labor Governments. Conservatives care nothing for the rights of workers and have given them nothing over the years but misery. The electorate have short memories of WorkChoices and John Howard's desire to create a US style Labor force in Australia. Liberals are only interested in supporting big business and care nothing for the health and welfare of the average citizen. What is the point of a 22 billion dollar surplus when Howard and Costello were too stingy to spend any of it in benefiting the health and infra-structure systems?
 
 
0 #4 Even though the world economy is quicklyJamie 2011-12-09 08:19
Even though the world economy is quickly heading to financial armaggedon (remembering you can not continue to spend without having to eventually pay, and we live in a finite world with faster and faster population growth of which all want an increased standard of living...which can not be sustainable), Australia still has relatively great terms of trade. We still should be using this as a time to top up the "bank", not blow the budget. Tighten fiscal policy and banking laws to ensure that the mega banks dont implode due to their greed (its one of the key reasons we didnt hit the toilet with other countries during the GFC). Some of the social programs Labor implemented will be a long term benefit, however their dart board approach to stimulating the economy was reckless and reminiscent of a teenager buys all the girls a drink at the bar (buy enough and you are bound to eventually have success, but in likelihood you will be broke at the end of the night!!). Its times like these that good economic policy is the key and Labor just doesnt cut it.
 
 
0 #5 The problem is this. While past neo-consRon 2011-12-09 11:28
The problem is this. While past neo-conservativ es such as Reagan/Thatcher and their antipodean admirers headed by the Howard faction in the conservatives camp, made deregulation their rallying cry, the career ALP politik cohort in an attempt to "prove their financial creds" have also pinned their colours to the "market forces" masthead. But with that territory goes the holy grail of ALWAYS returning a budget surplus. Due to globalisation the consequences of the overseas neo-con ideologically driven deregulation frenzy are having a big impact on Australia. And it not over yet. The career pollies of the ALP think they will be pilloried by the neo-cons across the chamber if the budget goes into deficit. They are right but which is more important, stability and survival for the average Aussie or open slather political point scoring by "pit bull" TKO Tony and Co. Upholding the former and wearing the latter requires courage, leadership and vision. So far no runs on the board in that area. But all of this is secondary to the real issue of how Australia is going to sustain its financial stability in the longer term. Switching from a debt driven consumer economy to and economy based on productive capacity from an industrial base is the best means for achieving this. Given Australia's size strategic industries are the way to go. But neither the conservatives or the ALP have shown even a modest capacity to address this matter of securing our future. Given this, the hubbub over whether its a surplus or deficit is very small beer indeed.
 
 
0 #6 What as the RBA got to do with the UN! TTrue Queenslander 2011-12-09 17:43
What as the RBA got to do with the UN! The UN is a hydra and as such has its poisonous tentacles in many things. If you think for 1 second that the RBA is free from international interference then you are very mistaken. I has ties to the global rulers and does not act in our favor. And the unions line their pockets 1st then pretend to care for their members. All the labor and the unions stand for is sit on your backside and get something for nothing.
 
 
0 #7 Well I was hoping for a massive insurrecLorikeet 2011-12-17 14:13
Well I was hoping for a massive insurrection before the Carbon Tax was passed, with most of our politicians being pitched straight out of the windows.

If you don't want idiots from the major parties or Greens running the country, please do the sensible thing and vote for the smaller patriotic parties which would restore our manufacturing industries, support our farmers and workers and say: "To hell with the UN!"
 
 
0 #8 On current economic forecasts, the diffeGreg Platt 2011-12-18 22:10
On current economic forecasts, the difference between a small deficit or surplus in 2012-13 is neither here nor there, but Labor would be crucified by the media if it doesn't bring one in. What the Tories are ignoring, and the media are making sure most people in Australia don't realise, is that the current Budget settings in Australia are producing the fastest fiscal consolidation in history. No government in Australia has EVER cut the deficit faster than this government is doing. And, contrary to what the demagogues of the Right would have you think, the major factor behind the current deficits is the collapse in taxation income, not extra government spending. As revenue recovers, the deficit shrinks. Spending cuts are supplementary in returning the Budget to balance.

If the European economy goes pear-shaped & causes a financial collapse, the Budget deficit will start increasing again Government will also need to implement another stimulus package as well. It should be short-term, because the Chinese Government will reach into its bottom drawer and pull out the mother of all stimulus packages, which will bring the mineral boom back - with all its good & bad features.

Finally, "True Queenslander" resorts to Right wing conspiracy theories when confronted by evidence that can't be refuted. If we ever meet in person, I'd be happy to debate either the nature of the UN (I'm no fan, but there's no conspiracy involved in my critique) or the worth of the union movement - in public and at length.
 
 
0 #9 I think the budget surplus policy is purClive 2011-12-19 11:21
I think the budget surplus policy is purely political but none the worse for that. Why give the Opposition a free kick with their mantra that Labour cannot achieve surpluses and why not give the business sector the chance to strut its stuff rather than whinging like the major retailers do ut abo it being everyone else's fault. Highly paid CEO's should earn their money!