THE PRICE OF POOR POLICY

The policies pursued by the present Australian Federal Government are now starting to hit home. And not in a good way. The effects, already apparent if you look, are now going to be apparent to every household and business.

Having pilloried the entrepreneurial people of this country, and targeted the so-called rich, government finances are now so precarious that the reach of the taxman is now extending beyond those small groups into middle Australia. Higher marginal tax rates, additional levies, and increased costs are now going to suck the financial life out of these households.

Imagine, an outer suburb, pleasant and leafy, but not wealthy, two children and a couple of dogs. A 4WD and an old second car for shopping and school. A belief in personal and social responsibility. The backbone of the nation. These are the people who are now going to pay the price because there are not enough "rich entrepreneurs" to go after, even if this were a proper policy goal.

It is going to take many years before the full impact of policy error works its way through the community, and as Maurice Newman comments "Younger Australians are entitled to look back in anger as they realise how recklessly their future has been mortgaged".

Add in the facts of the struggling SME sector where most of the employment presently is - (some of this is anecdotal, much is not):

• 1,000 restaurants to close;
• 62% of SME's are chasing late payments from debtors totalling over A$10.00 billion;
• 240,000 jobs lost in the SME sector;
• Reduced hours because of penalty rates, even if people wanted to work those hours at the normal rate;
• 51% fall in engineering vacancies.

The list goes on.

Two of Australia's most eminent academic economists in a recent paper argue that "commodity prices, resources investment, and resources exports would shift from being a powerful stimulus .... to a deflationary influence of similar force over the next 18 months". (Reported by David Uren, Australian 13th May).

Scary stuff.

I have long commented that political and institutional Australia has been hiding behind aggregate economic data. Now the tide is going out and we all shall see - especially middle Australia - who has clothes on.