ross gittins

From SMH 17/10/07

BBI: In an article entitled "Tax cuts are a PM`s best friend" Ross Gittins makes some telling points about Howards Tax announcement on day one of the campaign.

Love me or loathe me, John Howard says, the Australian people know where I stand on all the major issues. If you haven't worked out where he stands on managing the Federal Government's finances, his decision to kick off the election campaign by promising a big tax cut makes it pretty clear....

All told, the surpluses over the next four years were now expected to be $46 billion bigger than first thought (ignoring the almost $13 billion in new spending announced since the budget).

Question is, what would an "economic conservative" do about that windfall? I think a genuine conservative would have trousered it. Stash it in the Future Fund or similar to be invested now and used to meet major expenses down the track.

The big advantage in avoiding spending those surpluses is that it would reduce the upward pressure on interest rates. It would mean the budget was acting to help slow the economy down a bit, thus reducing the need for the Reserve Bank to use higher interest rates to achieve the same purpose.

When you consider how much fuss Howard has made about his superior ability to keep interest rates low, it's strange he didn't choose that option.

Another approach, of course, would have been to spend the surplus surplus, so to speak, in some of the areas where the Howard Government's been pretty tight-fisted. We know, for instance, that public schools have been under-resourced, even though private schools have done well. We know the universities have been starved of funds for many years and that had we not been neglecting technical training the present shortages of skilled labour wouldn't be as bad.

We know the Feds have allowed their share of public hospital funding to slip well below half. Likewise, we know they haven't been investing in new public infrastructure the way they should have.

BBI: He talks of how much money each bracket will gain, and pointing out that the upper bracket will have the most to gain, he finishes with..

What all this tells us is where Howard stands on budgets. To him, nothing beats a tax cut when out to garner votes. Economic conservatism doesn't come into it. The punters can take their chances on crummy hospitals and schools - they should be using private hospitals and schools, anyway - and take their chances on interest rates, too.

Question is, will Kevin Rudd see it much differently? I suspect not.

BBI: We hope that Kevin will see it differently. There is a letter in SMH today which says what we feel.

Don`t succumb to the pressure to match the bribe, Kevin. Now is your chance to really put yourself head and shoulders above the other mob by dedicating the same amount of money to health, public education and improving the efficiencies of renewable energy sources. That would be vision. Brett Jack, Bonnyrigg Heights.