Josh Frydenberg draws a $65 billion line in the fiscal sand, writes swrighteconomy | ausecon RBA | ANALYSIS
The move to tell the NSW government thatto more state handouts to deal with COVID-related economic problems is recognition of two key federal government attitudes towards Omicron and its ilk.
Federal Treasurer Josh Frydenberg has drawn a line in the fiscal sand over further assistance to the states.The first is that while lives are not back to normal for many Australians, the federal government wants us all to feel that normal is within our grasp. As Frydenberg noted on Monday, while the past month has been anything but normal for most, it is nothing like the April 2020 lockdown or the disaster that Delta delivered the country between June and October last year.Australians in lockdown today like we did with Delta,” he told ABC television.“And people are continuing to spend.
The federal government believes January was the dark before the post-COVID dawn. As Omicron cases stabilise and people get used to giving their children a RAT with their morning Coco Pops, the prevailing view within Treasury and the government is that the economy will return to something approaching normal.Normal is not just about day-to-day life. It’s also about the budget and the looming federal election campaign.
Government gross debt is at $859 billion and on its way towards $1 trillion. As much as Frydenberg and Morrison have defended the red ink as an economic necessity, it is increasingly difficult to explain the situation to a Coalition backbench brought up on the budget surplus diet of John Howard and Peter Costello.
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