Last week the Business Spectator carried this gem (zero-price registration required):
… there are some who suggest the government should loosen up a little and let the budget slip into deficit.
Unfortunately, these sorts of comments rarely, if ever, include any analysis of the consequences of staying in deficit.
I have not seen anyone who is saying that the government should remain in deficit in 2012-13 articulate how big the deficit should be, nor offer any analysis of what the consequences of remaining in deficit would mean for monetary policy, the Australian dollar or Australia’s credit rating.
What size deficit are they advocating? Is $2 billion acceptable, what about $5 billion? $10 billion? $40 billion? You will rarely, if ever, see hard numbers put on the deficit objective.
There is also the legitimate question that if it is okay for the surplus to be pushed back to 2013-14, what if there is another flood, cyclone, war, tax shortfall? Shall we push the surplus back to 2014-15 or 2015-16 or 2016-17?
See the problem? No discipline.
One of the comments had this, rather tired, cliché:
What is the difference between a surplus of ~1b dollars and a deficit of ~1b dollars?
Well, okay. Let’s cross that bridge when we get to it. The basic fact of the matter is that Swan has failed to produce a budget deficit of $1 billion. Given his past performance that would be an extraordinary achievement.