Inflation down — the relief has been palpable, indeed almost orgasmic. Interest rates will not have to rise; the gummint’s final feather — a reputation for superior economic management — is intact. Or at least arguably. And it may rain, convincing the punters that the rain gods are with John Winston and his pals.
The inflation numbers are so good one could almost imagine they were specially crafted for the occasion. Surely not, cancel that thought, this is no banana republic. But wait, one of those pesky economists is offering advice:
A leading economist has warned of serious consequences if the Federal Government lowers taxes following the release of impressive inflation figures.
The consumer price index (CPI) rose just 0.1 per cent in the first three months of the year for an annual rate of 2.4 per cent. Economists had expected a rise of 0.6 per cent in the first quarter and an annual pace of 3.1 per cent.
But Access Economics Director Chris Richardson said it would be dangerous for the Government to now lower taxes. “We’re essentially talking opportunity-end motive –(which is a) dangerous combination at the best of times,” Mr Richardson told ABC Radio. Henry begs to differ. Cutting taxes is always a good idea, both politically and economically. Henry hopes that in the Budget the top marginal rate will be cut to 40%; and if Cossie really wants to give himself a chance to become PM, the remaining tax on superannuation should be abolished.
These good things might need to be staged to cut in over the life of the next coalition gummint (if elected), but this would give Howard a chance to retire as a winner and Cossie a chance to show he’d make a good PM.
Cossie is feeling pretty frisky himself, with inflation surprising everyone, not least the Reserve Bank and Treasury, on the downside. He attributes this to the new IR system, and Henry is inclined to agree. So, IR reform is boosting jobs and restraining inflation –not a bad outcome for a reform that the opinion polls say is unpopular with the punters.
It seems the CSIRO is also feeling frisky. Big Greenhouse emissions cuts are affordable and achievable, the CSIRO says, contradicting statements from Howard that put economic prosperity ahead of reducing emissions.
An official CSIRO submission to Howard’s emissions trading task group last month said most international studies now showed developed countries would need to slash emissions by 60% to 90% by 2050 to avoid “dangerous levels of climate interference”, Fairfax newspapers reported today. “Studies had also shown rapid action on Greenhouse gases would only slightly slow Australia’s and the world’s economic growth”.
Henry can hear the mutterings in the Cabinet room from here. “Bloody boffins — let’s cut their spending by another 10%. Help finance your tax cuts, Peter!”
Read more at Henry Thornton.