Article Review Essay Example
Article Review 1: Federal budget 2017: Don’t bet on the Rosy Wages Forecast
The article “Federal budget 2017: Don’t bet on the rosy wages forecast» written by Stephen Long on 16 May 2017 discusses the likelihood of the treasury’s prediction of the growth of the Australian’s economy and the increase of wages happening. The author nullifies any possibility of the predictions occurring. He explains that this will not happen because the prediction is unrealistic. The current employers are keen on increasing the workload without increasing the pay rates. The current workers, on the other hand, are comfortable dealing with more workload without increased wages. The fact that government has also limited the salary of the federal government workers, who make the largest number of unionized workers, further hinders the treasury’s prediction from occurring since it decreases the number of people that will get a salary increase in the country (Long 2017). The supply of workers in the market will continue to increase while the demand for workers hardly increase. This will be the main contributor to the workers handling more work without a salary increase. The GDP of the country will however not be affected with the failure to increase wages in the country.
The article uses several economic principles. One of these economic principles is the fact that people that are deemed rational make decisions at the margin. This economic principle means that people try their best to make decisions that give them the best possible outcome. In the text, the author highlights the fact that many of the individuals who are registered as self-employed might be employed. Their employers, however, try as much as possible from incurring costs associated with having employees (Long 2017). By doing so, therefore, they avoid costs such as paid leaves as well as other benefits that the law requires them to give their employees. The employers further utilise the concept of the rational thinking by increasing the work done by their employees without increasing their wages. By so doing, they ensure that they get as much output from their staff as possible.
The article further incorporates another economic principle, which states that people have to trade off one privilege to get another. This economic principle is demonstrated by the fact that one has to decide if he or she wants to have a unionised job or have a paying job. According to the author, unionised workers have lower chances of getting promotions due to the dwindling status of their jobs (Long 2017). Consequently, one has to decide if he or she wants job security that comes with being unionised or the higher chances of growing his or her career with a non-unionised job. Most of the Australians, however, choose to have non-unionised jobs and thereby increase their chances of having higher-ranking jobs.
The strength of the text is the writer’s ability to explain the identified economic principles very clearly. The article, however, did not exactly identify these economic principles. Although the application of the principles clear in the text, the author does not directly quote the economic principles. The reader, therefore, has to think critically to connect the economic principles to the right application. The document’s strength, on the other hand, is in the article’s use of accurate information. For example, the article refers to the fact that the government has capped the increase of wages of employees in the Commonwealth, which is confirmed as true by other media reports (Hannan 2017).
Evidently, the Treasury predictions will not be fulfilled. The federal government has to make more than just a claim and prediction of an increase in the wages earned by Australian workers. Although the predictions can be backed by historical events, the current economic situation is not supportive towards these predictions. The fact that most of the Commonwealth workers have their salaries capped by the government cancels out any possibilities of a wage increase in Australia. The greed of the employers will also hinder the occurrence of the rise in wages earned in the country since they will increase the rates of underemployment and underpayment of workers.
Article Review 2: GDP Forecast
The article “Federal budget 2017: Is the government’s predicted return to surplus credible?” by Henry Belot was written on 10 May 2017. It discusses the claim made by the federal government that by the year 2020, it would make a surplus revenue. The author explains that the predicted growth is expected to come from the country’s growth in wages earned in the country. However, experts claim that the target to give a surplus may be delayed since the state’s expenses are much higher than it was predicted. The revenue, however, has increased as predicted. The increased costs reduce the increased revenue thereby slowing down the growth of the economy as predicted. The government has increased its debt limit to $600 billion claiming that the increase is important, as it will help the country continue providing public services (Belot 2017). The higher debt rates will lead to Australia having a lower GDP than the GDP predicted by the treasury. There will be increased demand for money and a low supply of it thus the government will incur more debt.
The article uses the different economic principles. One of the principles that it uses is that people must make trade-offs in life and that nothing is ever free in life. The federal government demonstrates this principle by increasing its debt cap to $600 billion in the past year. According to Mr. Morrison, the increase is necessary for the sake of financing government operations and meeting citizens’ needs (Belot 2017). The country, therefore, has to forego its goal of decreasing the debt owed so that it can cater to a much more urgent need, which is carrying out government activities. Alternatively, the government could settle for decreasing the debts that the country owes and thereby sacrifice its ability to fulfil its duties to its citizens.
The article further utilises the economic principle that every opportunity has a cost. One of the ways that it demonstrates this is by showing the fact that the government has to pay for its ability to meets its citizens’ needs. This is through increasing the debt whose proceeds will be used to meet government needs (Belot 2017). This increase is the cost that Australia has to pay for effectively meeting its needs. The cost will further include a delay in achieving the set goal for decreasing the country’s debts and increasing the state’s revenue until it can record a surplus revenue.
One of the strengths of the article is its use of accurate information. The fact that the federal government had to increase its credit limit is correct since it has been covered with the same details by articles from other newspapers (Gartrell 2017; Manicaros 2017). The strength of the text further includes the ability of the writer to demonstrate clearly the use of economic principles in the country’s welfare. The two principles discussed are trade-offs principle and the costs of everything gained. The reader can easily follow and understand the aspects of the two principles based on the details shared in the article. It, however, has a weakness in its failure to include the name of the principles or the indication that they are economic principles. Therefore, the principles are only identifiable to people that are already familiar with them.
In conclusion, the Australian’s government goal of repaying its debts and creating surplus revenue by the year 2020 is impossible and will therefore not be achieved by then despite the federal government’s insistence that it will succeed in achieving its goal as planned. This is especially due to the increase in the government’s debt limit as it demonstrates that this year the government will increase its debt instead of decreasing it by repaying it. A delay in implementing the debt repayment plan will increase the time that the country spends before being debt free. A new plan that factors in the additional costs incurred with the growth in GDP should be factored in the budget plan to give a correct estimate.
Belot, H 2017, ‘Federal budget 2017: Is the government’s predicted return to surplus credible?’ ABC, 10 May, viewed 30 May 2017, <http://www.abc.net.au/news/story-streams/federal-budget-2017/2017-05-10/federal-budget-2017-government-predicted-return-surplus-credible/8513968>
Gartrell, A 2017, ‘Scott Morrison to lift credit limit as Australia’s debt hurtles towards $500 billion,’ The Sydney Morning Herald, 28 January 2017, viewed 30 May 2017, <www.smh.com.au/federal-politics/political-news/scott-morrison-to-lift-credit-limit-as-australias-debt-hurtles-towards-500-billion-20170128-gu0iin.html>
Hannan, E 2016, ‘Adviser boom despite public service wages cap,’ The Australian, 22 November 2016, viewed 30 May 2017, <http://www.theaustralian.com.au/national-affairs/industrial-relations/adviser-boom-despite-public-service-wages-cap/news-story/c47d02d74c0964ff4840be4c3515eb5e >
Long, S 2017, ‘Federal budget 2017: Don’t bet on the rosy wages forecast,’ ABC, 16 May, viewed 30 May 2017, <http://www.abc.net.au/news/story-streams/federal-budget-2017/2017-05-16/federal-budget-2017-wages-forecasts-not-likely/8528540>
Manicaros, A 2017, ‘How much government debt is too much?’ NT News, 16 May 2017, viewed 30 May 2017, <http://www.ntnews.com.au/business/how-much-government-debt-is-too-much/news-story/c48e81844ad70266a9c0e86fe468f92d >
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