April 26, 2011

Good times getting worse by the minute

We're often told that we mustn't become addicted or rely upon the resources boom, of which Australia sometimes seems to have a never-ending supply.  It's all going to go bust, so we're told. Ripping natural resources out of the ground, shipping them off raw (with no value add, thus forgoing a vast fortune), will, one of these days, result in depleted resources or depleted demand for our stuff.

Now the ALP is telling us that the boom is already bust, because the boom is bad for us and will create dire economic circumstances, like higher wages and inflation.

Apparently:  damned if resources aren't booming, and even more damned if they are. 
" ... as a result of mining companies' successes, prices and wages would spike and spur inflation, that larger investments by miners would entitle them to big tax cuts and that while the foreign exchange rate favoured commodity exporters now, other industries were feeling deeper pain than they did in the last resources boom.

"That means government revenues will not grow at the sorts of rates we saw during the previous boom," Mr Swan said.

"We should not expect to see a repeat of the massive $334 billion upward revision to tax revenues that occurred between 2004 and 2007."

The Treasurer said the economy faced inflationary pressures from the growing investment by miners that would be necessary to satisfy demand for Australian resources.

"An unprecedented investment pipeline will stretch our economy's capacity in the years ahead, putting pressure on prices and wages."

The right thing to do in this situation, he continued, was to restrain government spending and budget for future surpluses in order to soften the forecast inflationary risks.

"This means taking difficult Budget decisions now to keep ahead of the challenges, rather than playing catch up down the track when the consequences of inaction could be much more severe."
And that's why welfare recipients are going to be bludgeoned in the next budget.

Now it all makes perfect sense.

Big Wayne to make big spending cuts

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