Political Lies

I'm a fairly amiable person generally and I try to see the good side of everyone, even politicians.

But there is one politician whom I can't stand, probably because she lies through her teeth constantly, and is arrogant about it as well.

Penny Wong was a dunce as Climate Change Minister and now in her lesser role of Finance Minister is even more grating.

This morning she was wheeled out on the "AM" programme to spin the latest Government line about the Government's budget predictions. Before the election the Government was selling their fiscal management credentials and insisting that the budget would be back into surplus by 2012-13-- a piddling $40 million I think which in household terms is like saying by next year we should manage to save 50 cents more than we spend. It was always a bit iffy, but with a strengthening economy you could expect that if they fail to get a surplus that year, they would be OK the following year.

However they made some costly promises in the election, but they are not prepared to say that this will wipe the budget.

Now Penny Wong is selling the lie that "simple logic" (a phrase she used about a dozen times in the AM interview) says that the rising dollar is going to hit the bottom line of the Government. Of course the illiterate ABC journalists refuse to question the "simple logic".

Actually the logic is far from simple.

On the one hand the rising dollar makes our exports more expensive overseas. So mining companies, farmers, local tourism operators and other exporters of goods and services will be potentially less profitable meaning less tax to the Government.

That's where the Government gets its justification for saying that it will have bigger deficits than expected.

But a rising dollar cuts both ways. Imports will be cheaper, so all of those consumer goods that we love to spend our spare cash on will over time drop in price, meaning that importing companies (such as Harvey Norman, Apple etc) will be more profitable and paying more tax. For the losses in local tourism there will be gains in more people buying airline tickets to go overseas.

But the situation is complicated even more for the Government by its own expenditure. Governments import goods and services from overseas. Much military equipment and much of its technology are imported, and all of those will now be significantly cheaper. So the higher dollar actually helps the expenditure side of the budget.

I'm no economist so I can't analyse Government figures in detail.

But I can tell you that what Penny Wong and Wayne Swan are telling us is basically a big lie. In fact whenever Penny Wong opens her mouth you can generally be sure that it is a lie.

I am sure that the appreciation of the Australian dollar over the last few months will have an impact on the Government's finances.

I am also sure that the effect it has will be far less than the cost of the promises it made in August to get re-elected.