The government is planning to release the 2012-13 MYEFO at 11 am tomorrow morning. It is a bit early but timely.* It is now very clear that the government is going to struggle to meet its promised budget surplus (as we at the Cat having been saying for a long time). This is how the Wall Street Journal describes the situation:
The push for new savings comes as the wider economy slows in line with weaker global growth. Unemployment rose to 5.4% in September from 5.1% the previous month and the nation’s trade deficit has expanded to its widest level in more than four years.
Mr. Swan will outline the revenue measures in the government’s midyear economic review due on Monday, which will include sharp cuts to the government’s revenue forecasts even as the outlook for economic growth remains intact at around 3.0%.
That is one way of looking at things – but incomplete. The biggest problem the Rudd-Gillard government have had in balancing budgets is their excessive spending. Rather than cut spending they have chosen to rely on dodgy revenue forecasting, various tax increases, new taxes, and cutting proposed spending (but not actual spending) to achieve a rather modest forecast budget surplus.
The vultures are coming home to roost and I’ll be interested in seeing who buys whatever spin the government is going to have to produce.
* In Australia corporations face a continual disclosure regime – I see no reason why the federal government shouldn’t have to report its own finances on the same basis.
The goose is no Houdini.
If they claim that fantasy $1.5 billion surplus, it will be bullshit.
But as we know, they have no shame.
Rabz
21 Oct 12 at 6:34 pm
I expect the usual tricks – eg pushing back expenditure and pulling forward revenue / new taxes etc. Beware always the claim of savings when we know this government describes tax increases as savings.
But what if things continue to worsen – will there be a post-MYEFO MYEFO? The desperation of Swan to promise a wafer thin surplus he will never deliver.
Apart from a savage cut to budget spending (genuine savings), the only way to get a surplus is to find a time machine and wipe out the past five years of appalling spending decisions.
Samuel J
21 Oct 12 at 6:40 pm
Should have a calcutta on it, or something.
m0nty
21 Oct 12 at 6:41 pm
Watch the increases to foreign aid and DFAT because of the Security Council win. These should be cut.
Samuel J
21 Oct 12 at 6:44 pm
Another Treasury fairy tale from Mother Goose.
H B Bear
21 Oct 12 at 7:19 pm
What’s the bet the gov’t just cuts Defence.
Adrian
21 Oct 12 at 8:15 pm
Samuel, they announced on the news that they expect to raise an additional $500 million from visa processing fees. They called it savings.
Keith
21 Oct 12 at 8:43 pm
Yeah, but to be fair they call spending, investment.
all soSteve of Ferny Hills
21 Oct 12 at 8:58 pm
Yeah, but to be fair they call spending, investment.
Steve of Ferny Hills
21 Oct 12 at 8:59 pm
Treasury must be anticipating a lot of Australians will just give up and leave the country for Guatemala or the Solomons or somewhere similar which offers a brighter future!
Mick Gold Coast QLD
21 Oct 12 at 9:06 pm
I don’t know Mick. Maybe they plan to start billing the asylum seekers.
Keith
21 Oct 12 at 9:15 pm
This. Spending will be delayed. Revenue brought forward. Auction digital spectrum early. Sell some other asset. He might even raid what’s left of the FF and trash Super.
Entropy
21 Oct 12 at 9:43 pm
The best thing (from the Goose’s perspective) is that all those delayed expenditures are things he will never have to deliver, but are a time bomb for the AbbottAbbottAbbott.
Entropy
21 Oct 12 at 9:45 pm
One more thing. It’s October, and they are doing an MYEFO now?
They must be scared the numbers are really in the crapper, so they are using the older set of numbers rather than the ones the would have to use if they waited until late Nov, early December. You know, mid year.
Entropy
21 Oct 12 at 9:59 pm
Is a mid-year economic review trundled out 4 months into the financial year a sign of panic? and/or, bad economic forcasting? and/or, incompetent financial management? and/or, all of the above?
GerardB
21 Oct 12 at 11:20 pm
Extra dividends from Medicare, EFIC and the RBA. These are not savings!!!
Samuel J
21 Oct 12 at 11:31 pm
Maybe the rush has something to do with the recent trend of this graph.
kelly liddle
22 Oct 12 at 12:37 am
Suspiciously premature outlook by Judith Sloan and Labor’s rush to pull veil over budget black hole a conjuring trick by Mathias Cormann both riff on this theme.
benson
22 Oct 12 at 1:05 am
Well let’s count our blessings- if Swan waited until December for the true MYEFO figures, he’d have to slash even more from defence, raid even more piggy banks, destroy tourism by hiking visa fees even higher and gut medibank private, the Future Fund and Super in pursuit of his mythical surplus. This way at least, he’ll inflict less damage, and they’ll probably go for a first quarter election to avoid admitting that their surplus didn’t eventuate.
Cold-Hands
22 Oct 12 at 1:30 am
From the day Labor was elected there was no chance it would return a surplus. That is not why Labor MPs stand for election. They are there to spend taxpayers money. All the pressure is to spend more not less.
Bob of gulf point
22 Oct 12 at 6:39 am