The Federal budget is the focus of business news this week. Defence and Howard’s battlers are expected to do well, with tax cuts or cash for childcare on the list of spending.

The budget has been widely leaked, to an extent that, as a wag on ABC radio said, should solve our water problem.

In today’s Oz, David Uren provides evidence that consumers are doing well at present, but he goes on to say export volumes have not risen as predicted:

When the Reserve Bank pricked the east coast housing boom at the end of 2003, it was forecast that the domestic drivers of growth would be replaced by export demand … But exports have constantly disappointed.

Regardless, any extrapolation or acceleration of positive consumer trends will quickly put pressure on the RBA to raise interest rates. The key point for Henry will be how the budget will offset this risk. Henry’s budget watch will report on Tuesday evening if you somehow miss the TV coverage or become tired of the talking heads which follow the Treasurer’s budget speech.

Veteran guru Paul Kelly recently commented on the appointment of ANU’s Professor Ross Garnaut as “Australia’s Nicholas Stern”.

The policy and strategic flaws of the Howard Government have been exposed this week with the appointment by ALP leader Kevin Rudd of Australian National University economics professor Ross Garnaut to produce Australia’s version of the Stern report. This is what John Howard should have done a year ago … Howard’s refusal to investigate the optimal solution to climate change on Australia is a blunder that will haunt him.

The global climate change experts are united with the proposition that the world does not have long to solve excessive CO2 emissions.

Henry fails to understand the passion of the climate sceptics — surely the cautious, conservative approach is to act just in case the consensus is right. Naturally one would proceed cautiously, especially where great damage would be done to Australia’s economy.

But cleaner industry and a less consumerist society would surely be no bad thing.

Read more at Henry Thornton.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey