Politicians beware:our prospects look good

Australia’s economic prospects look good, as the country moves towards the Federal election due later this year.

Voters, though, should be wary of big electoral promises, offered by any of the major parties.

They might well be particularly hard to fund, this time.

The extra spending, in the Rudd government’s stimulus package, is now putting considerable pressure on the Federal budget.

The Treasurer, Wayne Swan, conceded yesterday that Australia had been helped by China’s economic strength, after the global economic crisis struck.

However he told  ABC television that the stimulus had been mainly responsible for Australia’s relatively strong performance over the past year.

“I think it’s very important to understand that – first and foremost – our domestic surplus – delivered in a timely way – is the principal reason why the Australian economy is so strong, compared to just about ever other advanced economy,” Mr Swan said.

New evidence now suggests that Australia’s relatively strong performance is likely to continue.

A leading index, produced jointly by the Westpac Bank and the Melbourne Institute, continues to surge.

A senior Westpac economist, Matthew Hassan, said that “continues to point to a dramatic improvement in (Australia’s} growth prospects.”

Mr Hassan said the index also suggests that the Australian economy now has a growth outlook that is on a par with that seen in 2007  “at the height of Australia’s resources boom.”

However if that produces fresh inflationary pressures  the Reserve Bank is sure to respond with further interest rate rises.

So the  election, later this year, will be held in good, though necessarily restrained times.

Certainly not at a propiti0us time for politicians, from any party, to be making  expensive promises, to win votes.

Reject those who do.