"I've always found that if you get the economics right, the politics will follow" announced Peter Costello as he delivered his 12th budget.

With elections looming and the Coalition behind in the polls the Government has used the budget to affirm its economic proficiency while simultaneously enhancing Peter Costello's claim to take over from John Howard.

With $31.5 billion in personal tax cuts over four years, lower income and part-time workers will receive a larger portion at first followed by the higher income earners in 2008. Politically this strategy is aimed at winning the votes of low to middle income earners considering that past budgets have been criticised for being skewed towards the rich. Economically the result will take pressure off inflation and increase labour supply to the economy.

Peter Costello has called this budget his "education revolution" which is a direct quote from Kevin Rudd whom he joins in celebrating education as an investment in the future. The reform is politically quite brilliant as it overcomes the centerpiece of Kevin Rudd's economic policy by introducing a Higher Education Endowment Fund.

Together with spending on education, health care, child care, road, rail and the environment the budget should boost the Howard government in the polls. Concurrently, maintaining a budget surplus, a forecasted rise in GDP next year, manageable rate of CPI at 2.5% all without putting any upward pressure on interest rates and expanding the economies production capacity.

It may be a little early, but it seems unlikely that Peter Costello will deliver a 13th budget.

Comments and Suggestions welcome.

Avneesh Manik

The Howard Government's Achilles’ heel is climate change and Costello's budget failed to address the issue. It's not simply an environment matter, but an economic concern. The longer Australia delays making the adjustment to a low-carbon economy, the greater the economic dislocation we shall endure.

Moreover, by failing to support the renewable energy sector, the Howard Government is depriving Australia of a lucrative export industry. Considering our woeful trade performance, Australia should not overlook the opportunity to become the Southern Hemisphere's hub for renewable energy technology and products.

having to play santa claus every few years dooms effective planning. costello has to suck money out of education, health, and infrastructure planning in order to get the attention of the lovable but child-like ozzie voter at election time.

this cycle of austerity and largess is plain enough to ozzie voters, they might well support action to allow long range planning if it were possible. but it is not possible in a parliamentary society.

a nation with a citizen initiated referendum could gradually wrest the wellbeing of the nation from the election plans of individual politicians. i do wish you'd get started soon.

Economic vs Politics - great topic AV-Ace11.

Your Costello quote; "I've always found that if you get the economics right, the politics will follow".

This reflects the critical Liberal Party problem.

A true 'liberal' would have put it the other way round.

ie: If you get the politics right the economics will follow!

WHY?

Economic's like all other sciences is, and ought to be based on research. If your research is flawed, then that research will impact the outcome for many years to come. (Housekeeping literally)

Politic's is about piety (supposed to be). It is about life-quality and how people experience it, in their every-day-life. This is a certain.

Economic's on the other hand... although it is a science, is the only science that has to be experiemental because you can not easily predict an outcome. Economics more than any science must be careful it has the basis of special knowledge, meaning the right kind of framework for "inference".

If economics makes some of the research data "invisible" as with the employment - training and welfare figures than immediately we have a problem. Same can be seen in Water and Health, and the Skills and Trades Shortage.

These issues are centrally ones of economics, and push the sustainablity and merrits in good politics.

I am glad this particular election is flushing out some of the core issues. I feel as Australians we are critically learning more at this time, than we have in previous elections.

Thank you for the chance to contribute. It is our future and the possible uncertainity - exactly, that's on the line.

This is why a structural reform now, from Federal and Local Councils in Qld, is a critical issue, to ALL people, as it is about our future.

http://www.miacat.com/
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The Howard government has been a pretty poor economic performer. The total tax burden as a fraction of GDP reached record highs under Howard. The tax cuts barely claw back what was lost to bracket creep. If he was serious about economic management he would index income tax brackets. Instead he is handing out huge sums of money to home buyers. This was supposed to help people buy houses but most of it has been swallowed by the inflation on house prices created by the grant. Howard is abusing FOI laws to prevent journalists finding out how much this scheme costs. He is also handing out huge sums of money under the baby bonus scheme. These are poor economic decisions, but good political ones. Everyone likes a handout and there is a tendency to ignore the problem of where the government gets the money from.

On global warming, Howard is 'warming' to carbon trading but has ruled out a green tax shift on the grounds that it would 'hurt the economy'. This is total rubbish. A green tax shift would be far better for the economy than carbon trading. The only people it might be worse for are the oil and coal companies as we wouldn't hand them the right to pollute for free and then buy it back in ten years time at a hugely inflated price. Howard also abolished indexation on fuel excise. This is another bad decision from an economic perspective as the tax on fuel should at least cover the cost of maintaining roads, otherwise we are actually subsidising road transport when we should be cutting back on it.

http://www.ozpolitic.com/articles/sustainability-party.html

Like all politicians, Howard likes to claim credit for a booming economy that has little to do with his policies, but when things go bad they blame it on global conditions or something else over which they have no control. The truth is that so long as the government isn't stupid (the current government is close) then most of what happens with the economy is not down to politicians. Where government policy does have an impact, many of Howards policies have harmed the economy.

http://www.ozpolitic.com/articles/sustainability-party.html