The 2012 budget presented by the Treasurer Mr Swan, seems likely to have a highly contractionary stance. By this, economists mean that it will reduce aggregate demand and hence economic growth as the budget outcome moves from $44 bn deficit in 2012 to a $1.5bn surplus next year.
But all is not at it seems. What light can Ross Gittins shed? Read his article and see why.
For a comparison, consider the French government’s problems in returning the budget into surplus.
France’s budget woes
Well, perhaps that is not really the plan but the new President certainly has a job ahead to return the budget to a more sustainable level, especially given the consistently large deficits over a long time.