Wednesday 10 May, 2006
University of Queensland Business School's Professor Ken Wiltshire believes the politics of the Federal Budget delivered last night are as clever as its economics.
He said it addressed many of the fundamental taxation reforms being pressed upon the government by business, farmers, and welfare groups and created more incentive at the same time.
He said, "This Budget benefits higher income earners in a non-election year, especially through the drop in the top marginal tax rates and superannuation reforms, leaving the 2007 election year budget free to target the middle income voters in the marginal seat mortgage belts of Australia - especially in the outer suburbs of the major cities."
"It is weak on Australia's urgent need to invest in skill formation and ensure environmental sustainability, but these will clearly have to be targeted in next year's budget since they will be the foundation of the Labor Party's election platform - the government has sufficient remaining surplus to mount an election war chest for this purpose.
"Politically the goodwill from the wide tax cuts is probably sufficient to offset the pain from higher interest rates and oil prices.
"The budget has also boosted Peter Costello's popularity and he can feel more relaxed and comfortable at the increasing likelihood that John Howard will hand over the leadership to him at the end of 2006 or beginning of 2007."
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