So Mr fortune teller knows how long the current business cycle is going to last does he? I wonder why he is wasting his time here when he could be making millions from his prescience. If he doesn't know then how can he make valid calculations concerning current and future Rudd govt deficits?

I don't know if many have noticed but there's a world-wide financial crisis going on.
A fiscally conservative approach would be to stand back and let the market fix itself.

Withdraw bank deposit guarantees for example, and just let a few banks go under. Access to available credit would get much worse.

Then small (and many large) businesses would grind to a halt and it all falls in a heap.

Keeping money circulating quickly inside the economy on a large scale is something that only a government can do.

I presume that this crisis is a poisoned chalice for any government in power at the moment.

I'm sure Rudd dislikes the circumstances more than most but they aren't the same as they were only 12 months ago.

The hysterical ravings in the media regarding federal deficit budgets and the supposed need to get back into surplus as quickly as possible demonstrate the unfortunate fact that most people do not understand the functioning of a federal budget.

It makes perfectly logical sense to most that a federal budget operates much like a household budget, where the household must earn or borrow in order to spend – therefore, a surplus must indicate that the government has savings, which are good, while a deficit indicates that the government has a debt which must be paid off by levying taxes. Perfectly logical assumption but the truth is that the federal budget does not function remotely like this.

Federal government is the monopoly issuer of currency and has no need whatsoever to earn (tax) or borrow before spending. It may simply spend whatever it sees fit regardless of the budget position. It does not accrue surpluses by saving taxed dollars – these are extinguished.

A surplus is merely an accounting statement indicating that the government taxed more than it spent – there is no stock of surplus dollars being held by the government.

Conversely, a deficit simply indicates that the government spent more than it taxed, injecting new financial assets into the econmy.

How quickly we forget that from WW2 to 1970, all major parties had their turn at government and produced but one single surplus budget between them (1951 – Arthur Fadden). Nearly 30 years of straight federal deficits – and yet, it is remembered as a golden era. Unemployment averaged around 2-2.5% because government was committed to maintaining full employment by filling the inevitable spending left by the private sector.

Properly managed and targeted deficits are good and I hope they continue.

There is a simple and easier explanation to explain it; To describe it in terms that befits the outcome – It is Fiscal and economic Knee capping orchestrated by the State – Just to be sure it will be a long – long way off that any honourable fiscal responsibility and its likelihood – not likely to return.
Globalisation Mission accomplished , and the new wheel chair races begin.

Malcolm Turnbull spent most of his budget reply complainung about the defict. However, if he was serious about reducing the deficet he would have had some serious proposals for reducing government spending and/or increasing government income. Things like increasing the top tax rate instead of reducing it, opposing the pension increase and nominating infrasructure spending he thought we couldn't afford. But what did we see? A proposal to a small increase in tobacco tax to offset the cancelling of a saving that penalized a few people in his income bracket?

The real message from Malcolm appears to be that he is a closet supporter of most of what the government has done to date about the financial crisis. Which is a polite way of saying that he is a lot more sensible than he would have us believe.

We should elect governments on the basis of our confidence that they have what it takes to handle new crisis, not to keep promises that no longer make sense or have become unaffordable. At times like these we need hard nosed pragmatists who don't get tied down by old ideology and are smart enough to recognise and implement the the good ideas no matter when they come from.

Kevin must cut back on the size of Govt.Take away more powers from the state Govts and stop all this duplication.Amalgamate the local councils and make them responsible for health,education local infrastructure etc.We are just too over Governed.

Presently Kevin is playing the politics of envy and blaming capitalism and free markets.The free markets have not been allowed to operate.Fannie May and Freddie Mac were a result of Govt intervention and too much cyber money pumped into the system.

The role of Govt should be as a referee,not a player who makes up their own rules.Communism is a proven failure,so why are we now seduced by notions of more Govt intervention?