Analysis By: Elson Goh, Curtin University Tutor & Certified Financial Planner
Fiscal policy is the tool used by the government to adjusts its spending levels and tax rates to influence the economy.
The current state of the economy requires nothing short of a miracle to turn it around. Business confidence have fallen close to recession levels and property prices have plummeted across almost all states.
Will this round of tax cuts be enough to turn the economy around? While many have argued that the tax cuts will not have an immediate impact unlike direct government spending, the benefits are certainly passed on to more people.
The last time the nation faced these conditions were back in 2010. It was a Labour government and they tried to spend their way out of the problem; including the solar panel rebates, home insulation scheme and cash for ‘clunkers’.
With the benefit of hindsight, we now know these initiatives did not achieve the desired results. It created an unsustainable surge in selected industries and the big losers were non-homeowners as many of the programs were property centered.
There may be discontentment in this round of fiscal policies and some may feel that they are not getting as much cash in their pocket as others in certain tax brackets.
However, at least the benefits are passed down to everyone.
For young people, this is an opportunity to use this round of tax cuts to get ahead. It may be another decade before another one comes along.