Budget 2020

The budget had something for everyone, unless you are one of those left to pay it back.

Budget 2020

The Government had little option other than to throw billions in borrowed money at almost everyone.

They rightly focused on helping business to generate jobs and invest in productive capacity but the overall figures would be describe by Sir Humphrey as 'courageous'.

The mainstream media will have a pretty good analysis over specific measures so I want to discuss what it means for our future. Let me begin by putting some of the numbers into perspective.

Next year, Australia will have a $1 trillion dollar gross debt.

If that money were in $100 notes, it would fill more than four olympic size swimming pools.

If we decided to fill those same swimming pools with all the gold ever mined in the history of the world, it would only take around three and a half pools.

To put it bluntly, our national debt is a massive amount of money.

To pay it off there are only two solutions. We either create inflation (which governments around the world are desperate for) or we grow our economy through private enterprise.

There is simply no prospect of taxing our way out of debt or into prosperity which seems to have been recognised by the government. That's a positive sign but unless that lesson is picked up by the opposition then it simply becomes another political battleground.

This then becomes problematic in the longer term.

No matter what the incentives, individuals and businesses crave certainty because it engenders confidence. If you have a reasonable idea of what to expect in the future you can make the appropriate arrangements.

And as has been mentioned many times, confidence is the key to everything economic.

This budget will give some confidence because they will receive a cash hit, some tax benefits and some investment incentives. However I suspect that sugar hit will be short lived.

Eventually the reckoning of what we have done to ourselves will dawn on everyone and it isn't just a product of the Corona mania.

The lack of confidence is driven by a decade or more of broken promises from their elected representatives. Their financial promises have repeatedly been proved as constructed on foundations of sand.

I say again, the government had little choice but to deliver the budget that it has.

However, just like a frog in a simmering pot of water doesn't know it is being cooked alive, the Australian people have been conditioned to accept looking after today no matter what the cost tomorrow.

This budget has just turned the thermostat up a notch or two.

Great! You’ve successfully signed up.

Welcome back! You've successfully signed in.

You've successfully subscribed to Confidential Daily.

Success! Check your email for magic link to sign-in.

Success! Your billing info has been updated.

Your billing was not updated.