Former Reserve Bank board member Warwick McKibbin has suggested a new election may be needed to resolve the Senate impasse holding up key budget savings, as he lashed the political populism of the Greens and Palmer United Party. And Bank of America Merrill Lynch economist Saul Eslake has suggested a mini-budget was ”one of the options the government needs to think about” as consumer confidence falls, unemployment rises to 6.4 per cent and, if the political uncertainty continues, business confidence potentially falls. The comments came before a scheduled meeting between Joe Hockey and PUP leader Clive Palmer on Tuesday, with the Treasurer rejecting former treasurer Peter Costello’s call to drop the proposed $7 GP co-payment and declaring budget critics should not write off key measures.
Professor McKibbin told Fairfax Media that by blocking a suite of key savings, the crossbench had held Australia back from tackling longer-term fiscal challenges. ”The politicking of minority parties has done damage to the economy and over time that can build up. Firms can’t make decisions because of uncertainty and uncertainty is damaging consumer confidence,” he said. ”At a macro level the budget is about right, we need to stabilise debt and trim back expenditure.”
The government ”needs to better explain why they have put in place measures” such as the $7 GP co-payment and that Labor’s adoption of Tony Abbott’s opposition strategy was ”good politics but has caused damage to the economy”. But he added: ”It’s the populist parties like Palmer or the Greens [blocking reform].”
Full Article: New election mooted to bust budget impasse.