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Hedge Clippings | Friday 05 July, 2019
If Hedge Clippings dredges back into his (or his children's) childhood far enough he can recall a tale of a big bad wolf threatening to "huff and puff and blow your house down". Of course, he failed when the house was sturdy and made of bricks.
This week the opposition huffed and puffed fighting against tax cuts before finally realising that the government's house, based on its recent election victory, was sturdy enough. So, what did they do? A 180 degree turn, and voted in the Senate to approve them. Pauline's One Nation abstained, and Cori Bernadi was absent, leaving only the Greens voting against.
The Greens voted "NO" but they vote NO to anything and everything. What's new?
Whether phase 3 of the tax package ever gets delivered in 2024 is a moot point, but if Albanese and Co are in power by then I'm sure if they wind them back they'll pay the price. That's nearly 2 more elections away, and fancy going to an election with a promise to increase income tax, even if it is for the higher (but not the highest) tax bracket?
The question is whether the immediate tax hand out, coupled with the RBA's rate cut, will be enough to make a difference to the economy. For those who say consumers will put the combined effects towards reducing debt rather than spending it, dream on. OK, some might, but most will do the obvious, even if not the most prudent thing, and spend it, whether at the local electrical outlet as Gerry Harvey hopes, or down at the TAB or the pub.
As far as the RBA's decision goes, it did seem a little panicky given the previous cut was only 28 days prior, the effects of which are yet to flow through, and the tax cuts were in the offing, even if not in the bag. Added to which reductions in mortgage rates only benefit those with a mortgage, while damaging those with bank savings. What we do concur with is the RBA's call that there's only so much that monetary policy can do.
Now it's up to ScoMo, business and consumers to follow through!
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