This week: A sugar-hit budget lacking in big ideas, James Packer faces the music (sort of), and Jacinda-mania part II.
A billion dollars here, a billion dollars there, pretty soon you’re talking real money.
Australians were reminded of this political maxim when Treasurer Josh Frydenberg on Tuesday unveiled a record A$213.7 billion ($153 billion) budget deficit, equal to 11% of GDP, for the financial year started July 1.
The optics couldn’t be more different from last year, when Frydenberg proudly forecast the first budget surplus in more than a decade. (The Liberal Party even started selling A$35 “Back in Black” coffee mugs to mark the occasion). But that was before Covid-19 upended the world and before a government that won an election on promises of fiscal rectitude once again discovered we’re all Keynesians now.
The centerpiece of the budget was a near-A$100 billion cash splash of personal tax cuts, wage subsidies, grants to young home buyers and business-investment incentives. So keen is Frydenberg to get the money out the door, that income tax cuts slated to begin in July 2022 were not just brought forward, but backdated to July 1 this year. They could be in workers’ pockets before Christmas.
While pitched as containing something for everyone, the budget isn’t without its critics. There’s not much for women, who have borne the brunt of job losses and pay cuts during the Covid-19 recession. And as Bloomberg Opinion’s David Fickling points out, the tax cuts are skewed toward higher-income earners, who are less likely to spend their windfall than low-income earners.
And while the budget delivers a sugar hit of stimulus to pull the nation out of recession, there was a conspicuous absence of big ideas or the kind of far-reaching reform needed by an economy that was already sputtering before Covid-19 hit.
Frydenberg may have missed the opportunity to put another political maxim to use — never squander a crisis — by failing to take advantage of these extraordinary times to set the economy up for its next 30 years of growth.
Like Father, Like Son
When media mogul Kerry Packer appeared before a parliamentary inquiry in 1991 and was asked to state his name and the capacity in which he appeared, he famously replied: “Kerry Francis Bullmore Packer, and I appear here reluctantly.”
His son James probably now knows how he felt. The 53-year-old this week endured three days of torrid questioning at an inquiry into alleged money-laundering at Crown Resorts, where he was formerly executive chairman and is still the largest shareholder despite stepping down from day-to-day duties.
In the most explosive evidence, Packer agreed with lawyers acting for the inquiry that threatening emails he sent while exploring a potential privatization of Crown in late 2015 were “shameful” and “disgraceful.”
(The Australian Financial Review later reported the recipient of the emails was Ben Gray, who at the time worked for U.S. buyout firm TPG Capital, and felt so threatened he hired a bodyguard.)
Packer said the emails reflected his poor mental health at the time, and that he’s being treated for bipolar disorder.
Beamed in from his luxury yacht, Packer, who now spends little time in Australia, said the company’s compliance regime has been a “failure” and agreed a restructuring of the nation’s largest casino operator is needed to keep its license in Sydney, where its new A$2.2 billion harborside gaming and residential project is due to open in December.
Jacinda-mania, Part II
New Zealand Prime Minister Jacinda Ardern has something most political leaders strive for but few achieve: authenticity.
As Wellington Bureau Chief Matthew Brockett reports, Ardern’s relatability has served her well during her first term, when the nation has faced some of its darkest moments — a terrorist attack by a white supremacist that left 51 dead, a volcanic eruption that killed 21, and most recently the Covid-19 pandemic.
Elections are being held Oct. 17, and polls predict a resounding victory for Ardern’s left-leaning Labour Party, despite a slumping economy and her failure to deliver on key pledges such as fixing a housing crisis and lifting children out of poverty. There’s even a chance Labour could win an outright majority, which no party in New Zealand has done since the 1990s.
After enforcing one of the world’s strictest lockdowns, life is pretty much back to normal in New Zealand. On a recent campaign stop, the 40-year-old was mobbed by supporters as she walked through the streets, with cries of “We love you, Jacinda!” common as she moved through the maskless throng. —Peter Vercoe
What We’re Reading
A few things from around the world that caught our attention: