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.
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