Tuesday, May 19, 2009

Tonight we dine in Hell!

I can't say I'm buying it either. Rather, I think the credibility of Ken Henry and the Treasury is starting to look very suspect. And now we have a way of understanding Labor's (and the Lib's effectively it seems) insane carbon tax - imagine a 25% increase in the GST spread across the entire economy.

Terry McCrann isn’t buying Treasury Secretary Ken Henry’s aggressive - even abusive - defence of the Rudd Government’s Budget - and its big claims that record growth will soon save us from its record deficit:
Henry & Co are ‘projecting’ growth zooming up to 4.5 per cent in that year, staying up there for the following year, then dipping a bit but staying ‘above trend’ - implicitly around 4 per cent - for the next four years out to 2016-17. That’s to say, six successive years of 4 per cent-plus growth.
This is a huge ask, almost unprecedented in the past 30-35 years. Indeed, yesterday Henry reached back - had to reach back? - all the way to the 1960s to justify its reasonableness…
There are three huge issues which shred the credibility - if that’s not too generous a word - of his and Treasury’s optimism.
Doesn’t he understand the trauma the world has gone and continues to go through? Yes, we might have a global upturn. But there is no way we can go back to sustained global growth of even the recent past.
Doesn’t he understand all the stimulus that’s been unleashed to try to mute the global slump and which will have to be unwound? The world faces exactly the same fiscal restraint - except much, much more harsh - that his own budget commits to.
And then there’s our own peculiar form of economic flagellation. The carbon tax. In 2012-13, the government is going to impose the equivalent of a 25 per cent increase in the GST, right across the entire economy.

Posted via email from Garth's posterous

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