Is Eurovision all about the show, populist appeal and a plethora of unnecessary key changes?

Or is it serious music?

While I enjoy the ‘political theatre’ of budget leaks as much as the next person, they really are excelling themselves in political nonsense (PN) at the moment. Do you feel you are being softened up? Are you hoping for a sensible debate based on sound economic policy that is good for the economy AND good for Australia? Sadly, the time for simplistic slogans has not yet passed. The only thing missing from this show is the bearded lady.

BUDGET EMERGENCY!! (PN) – We have a future budget issue not a current emergency. PM Howard introduced policy so that the ‘state of the books’ would be clearly known by both sides at election time. This was so there was no chance to promise the world in opposition, BUT then come into power and blame the outgoing government. No repeat ever again of the “Beasley Black Hole”! And you certainly wouldn’t add an additional $8 billion dollars to the deficit by paying the Reserve Bank additional funds that weren’t requested and not needed (unless of course it can conveniently fall into the previous period of reporting and budget year).

The world rating agencies have given us a “AAA” rating. Our debt level is only 30% of the average in the OECD. Our GDP is growing. Our unemployment is low. Some emergency.

We do however, have a medium to long term funding problem, and these issues around the ageing population and service, care and education need to be discussed. We need to debate what we, as a community, want and how we are going to pay for it. This is well documented on BOTH sides and was highlighted in the intergenerational report back in 2001.

THE REAL EMERGENCY – With this fictitious doom and destruction talking down of the economy, the actual threat to the economy is the budget itself. The danger is that excessive pessimism and a budget that causes contraction in business could be self-fulfilling and we may talk ourselves into a situation where confidence is trashed by the ‘emergency’ that doesn’t exist.

My advice to tomorrow is the same as for watching Eurovision: a good drink and don’t take it too seriously. Just remember that along with the reality there will be much Political Nonsense. And it will still need to get passed by BOTH houses of Parliament before anything becomes law.

So, to paraphrase an old theatre saying, “it ain’t over till the bearded lady sings”. I will send a brief summary of how the PROPOSED changes might affect your wealth creation and wealth planning strategies and what we may need to change.

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