Budget time

It is now one more sleep before the first Rudd government budget is bought down. Of course budgets, however momentous are not magic wands but they do tend to have a miraculous instant effect, if only because of expectations. This one is momentous because it marks the economic watershed between the Howard and Rudd administrations.

As opposed as I am to the neo-liberal globalization we have endured I still tend to see Australia’s economy in a global context. It would be plain dumb to ignore realities. So I intend to bounce a bit here off some of my international blogging friends and their marvelous insights.

First up, is Kvatch who recently pointed out that at least one Scandinavian country, I think Norway, actually has a well-being index. So I was also taken by this quote:

Apparently Norway and Australia are the two nations that have experienced the biggest boost to their terms of trade since the start of the decade. The prices that Australians receive relative to those that they pay to the rest of the world have climbed 40 per cent since 2004. Taken from Peter Martin (Canberra Times)

My Aussie compatriot, Lindsay's Lobes, does a wonderful job of informing me on economic realities, and never canes my knuckles no matter how far I stray from the path. He took on comments by D K Read in my previous post where Red referred to housing as an economic indicator. Charmer that he is Lindsay seems to support Red’s view.

Today in Australia statistics just released indicate the total value of housing finance approvals (excluding refinancing)fell for the second consecutive month in March - down 5.8% to $15.59bn, representing the lowest level in 18 months, whilst owner occupier approvals fell by 6.1% in the month.
Approvals for refinancing fell by 6.0% in the month, to indicate an unwinding of the late 2007 surge when customers moved loans from the relatively more expensive non-bank sector back to the big banks. The comments here

Quoting from News Limited:

HOUSE prices in some parts of Sydney have almost halved [$500,000] as battling borrowers struggle to keep up with increasing interest rates.

I tend to agree with Abi:

“"People are hurting" - that's it in a nutshell!” I’m also watching the supermarket food pricing; it is obscene at the moment. One item alone I noticed last week was a packet pasta dinner that had been on the shelves for weeks at .99c. Then I saw it was suddenly SAVE! BUY 3 FOR $3.00. Looking closer it showed the regular price as $2.30. That is a hell of a jump to justify holding the price and duping people already under pricing pressure.

These are the issues Rudd’s mob need to deal with now, runaway costs for basic essentials; food and housing. Lindsay’s tip for Tuesday budget - expect a surplus of $18 billion with about $4 billion in savings and several large scale new spending initiatives on climate change.

I agree with the surplus, though I would have expected higher to mop up the current growth spurt and dampen inflation. More worrying to me is just how can Rudd, or any other leader, turn around the mess world economics is in quickly enough to allow ordinary people to simply survive the crisis; to have a roof and to eat?