Oh Dear! I envy the Australians!

[wendigo100]

The ERM was clearly a mistake but I fail to see why reducing taxation, even drastically, is necessarily a mistake. Indeed the boom and bust times under the tories has more to do with their use of interest rates as an instrument of macroeconomic policy.

As I say, it is a very humble opinion.

From what I remember, the boom was so sudden that everyone thought they had arrived in heaven. The salesmen and higher management where my wife worked at the time threw a big party to celebrate their tax windfalls.

Presumably this precipitated the Tories use of interest rates to cool it all down but businesses and mortgage borrowers had already overreached themselves to try and make a killing, and banks weren't as kind with debtors then as they seem to be now.

[Mailman]

Further measures proposed included raising spending on defence and tax changes to encourage retirement saving.

Gosh, fancy that...tax changes to encourage retirement savings! What kind of wooly socialist thinking is this!

Mailman

[ALM]

ERM

In my humble opinion of course.

The ERM was clearly a mistake but I fail to see why reducing taxation, even drastically, is necessarily a mistake. Indeed the boom and bust times under the tories has more to do with their use of interest rates as an instrument of macroeconomic policy.

[wendigo100]

What was the second, out of interest?

ERM

In my humble opinion of course.

[ALM]

It was the first of the Tories' Two Big Mistakes.

What was the second, out of interest?

[Hart-floot]

http://news.bbc.co.uk/1/hi/business/4756151.stm

Australia unveils huge tax cuts

Mr Costello hopes the cuts will help cut unemployment further
The Australian government has unveiled wide-ranging tax cuts in a "middle income family friendly" budget.
The move takes advantage of an unexpected windfall for government finances from a minerals market boom.

Treasurer Peter Costello unveiled income tax cuts worth almost 37bn Australian dollars ($28.6bn; £15.3bn) - the biggest in the country since 2000.

Further measures proposed included raising spending on defence and tax changes to encourage retirement saving.

Mr Costello said the decision to cut income tax should help to reduce unemployment in the country, which is already at record lows.

"These changes... will provide more incentive for those outside the workforce to re-enter it and those in part-time work to take additional hours," he said.

In many ways Australia's economy is still based on primary exports/commodities and its done really well recently due to demand from China. But, as in the past, commodity booms always go bust. When that happens the Aussie economy will take a dive. The same thing happened in the late 1980's/early 90's.

[wendigo100]

Let's see what happens.

In the late 1980s, when the UK made massive tax cuts instead of gradual cuts over a few years, the sudden rush of extra money into the economy precipitated a massive boom, followed by a massive bust.

It was the first of the Tories' Two Big Mistakes.

[Gold Dalek]

http://news.bbc.co.uk/1/hi/business/4756151.stm

Australia unveils huge tax cuts

Mr Costello hopes the cuts will help cut unemployment further
The Australian government has unveiled wide-ranging tax cuts in a "middle income family friendly" budget.
The move takes advantage of an unexpected windfall for government finances from a minerals market boom.

Treasurer Peter Costello unveiled income tax cuts worth almost 37bn Australian dollars ($28.6bn; £15.3bn) - the biggest in the country since 2000.

Further measures proposed included raising spending on defence and tax changes to encourage retirement saving.

Mr Costello said the decision to cut income tax should help to reduce unemployment in the country, which is already at record lows.

"These changes... will provide more incentive for those outside the workforce to re-enter it and those in part-time work to take additional hours," he said.