No ifs, no buts … but

I am not sure it is really helping the federal government, all this discussion about will there or won’t there be a budget surplus in 2012-13.  But I guess it is entirely of their own making.

I think what is scary is the Prime Minister’s belief in the MYEFO forecasts as providing the basis of her on-going determination (belief) the delivery of the budget surplus.

Where are her advisers in all of this?

MYEFO downgraded the nominal GDP forecasts from 5 to 4 per cent.  The problem is that according the latest nominal accounts, nominal GDP is growing at less than 2 per cent.  Given that it is nominal GDP that is key in driving tax revenues – leaving aside the issue of the MRRT (see below) – the data are already in to show that the surplus will be missed.

The irony is that the MYEFO on which the Prime Minister places so much store provides some handy sensitivity analysis on the impact on the cash balance of a one percent fall in nominal GDP.  For 2012-13 ,the impact is negative $2.8 billion and for 2013-14, it is negative $6.7 billion.

On the MRRT, the word on the street is that a big fat zero, or close to, will be the revenue outcome for 2012-13.  (The gossip is that a small Japanese company has opted to pay a small amount thinking the big three would come good for policial economy reasons.  Wrong.)

In reality, the time for backpeddling (and fast) has already past.

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19 Responses to No ifs, no buts … but

  1. Rabz

    I hear joel ‘chinaman’ fitzgibberin’ is already out in the meeja talking about the need to recognise that the surplus is a bust.

    Undermining the goose is the objective here.

    Mind you, that’s hardly difficult – the stupid twit undermines himself every time he opens his big trout lipped gob.

  2. Andrew

    It would be better for Wayne Swan and Labor tactically to abandon the surplus now, so that the political fall out is not so bad, considering that it is Christmas time and people are not focusing on politics as much.

  3. This is occuring on the state level too. Overtly rosy forecasts about income in the years ahead increasing leads to the ability to nominate a surplus ‘once things pick up’.

    Suggesting that revenue will noticably pick up within five years is a mugs bet.

    It becomes increasingly stark when you the charts as forecast each year are laid over the top of each other, showing the ‘pickup’ being pushed back by a year each time.

  4. .

    Given current 2PP polling, Swan would lose his seat anyway in 2013.

    Good riddance to an incompetent huckster.

  5. Andrew

    Given current 2PP polling, Swan would lose his seat anyway in 2013.

    Good riddance to an incompetent huckster.

    I am not so sure about that. I don’t think the swing in Queensland against Labor federally will be as a strong in NSW, Tasmania and even South Australia. Some people think that Victoria could save Labor federally through picking up seats like Aston and Dunkley. Again, I am not so sure about that. Galaxy polls certainly show that the 2pp in Victoria is 50-50, which would indicate a 4-5% swing to the Coalition.

    Sorry to go off topic but polls certainly do influence the back pedalling and decisions on the surplus.

  6. I don’t think the swing in Queensland against Labor federally will be as a strong in NSW, Tasmania and even South Australia.

    That’s interesting – most commentary has been that Labor would lose Queendland completely or be left with a single seat.

    Down here I suspect Labor will lose 3 of their 4 seats.

  7. ar

    Labor can abandon the surplus now – they’ve already milked it for 5 years to hammer the opposition on their economic credentials and blackholes. It has served its purpose…

  8. Rousie

    Let’s not forget the massive blowouts in immigration.

    Swan will want to go to the electorate in March to avoid utter humiliation. Gillard will grab her bat and ball and say no because she wants to stay off an even bigger humiliation for as long as possible.

  9. Andrew

    That’s interesting – most commentary has been that Labor would lose Queendland completely or be left with a single seat.

    Down here I suspect Labor will lose 3 of their 4 seats.

    I am from Melbourne, so I could be wrong as I don’t know as much as people who live in Queensland but I think that the Newman budget cuts may hurt the LNP in Queensland. This is why I am cautious about Swan losing Lilley.

    On a more related note, it was interesting to read just recently that the Victorian State Government has increased it’s prediction on a budget surplus in their mid year economic forecast.

  10. .

    I am from Melbourne, so I could be wrong as I don’t know as much as people who live in Queensland but I think that the Newman budget cuts may hurt the LNP in Queensland. This is why I am cautious about Swan losing Lilley.

    Can you explain how this works? It’s a bit insulting to call everyone craven idiots who just want a place at the trough.

  11. Andrew

    Can you explain how this works? It’s a bit insulting to call everyone craven idiots who just want a place at the trough.

    I believe many people in general often confuse state politics and federal politics, therefore if their attitude is negative towards the state government, that can be reflected sometimes in Federal results. The media has really blown up the cuts in the media and with the recent division in the LNP, the image of the party is quite negative at the moment, so people may feel negative towards the party federally. It’s just my guess, I could be wrong.

  12. H B Bear

    Wayne Goosesteen’s place in history is assured. Never delivered a surplus, four of the largest deficits on record, took net debt from zero to around $200bn, introduced a tax that raised no revenue and was front and centre in killing off KRuddy, the peoples’ PM.

    Big Bill Ludwig couldn’t have found a better string puppet.

    Watching Michael Kroger serve it up to the Goose when he concedes Lilley at the next election will be one of the highlights of a great nights viewing.

  13. brc

    I am from Melbourne, so I could be wrong as I don’t know as much as people who live in Queensland but I think that the Newman budget cuts may hurt the LNP in Queensland.

    Well, I am from QLD. What you will notice is that this meme has been picked up gleefully and reported. The evidence is based around the fact that the state LNP have descended down from their 60%+ 2PP from the state election and are back down in the early 50s.

    What hasn’t been done is a state-based 2PP poll for Federal election voting intention.

    The entire ‘newman took all our money’ schtick is not something I have come across. Everyone I know is taking their medicine well, with a belief that it will lead to bigger and better things. Nobody seriously believes that big-borrowing and spending, blowing $800 million on IT projects, that sort of thing is something that QLD should return to.

    Ultimately it is impossible to say because no polling has recently been done, except for the leaks about ‘internal ALP polling’ which you can take as a crock, because they only leak polling if they think it will help their agenda.

    When the election rolls around again, I don’t see Labor picking up a single seat. Lilley went to green preferences last time, and the Green vote has definitely fallen. And the fact is, the places that are hurting at the moment are the mines, and that can be sheeted directly back to Federal reasons. Then you’ve got the little nugget of trying to ban fishing in QLD. It might fly in cafes in Fortitude Valley, but anywhere north of Bowen Hills and south of Woolloongabba, you’ll find a lot of fishing boats in backyards.

    Everyone who thinks Labor is going to hold in Victoria conveniently forgets they have to find 2 seats to replace Windsor and Oakeshot. So they have to hold QLD, hold NSW, gain +2 in Victoria and lose none anywhere else.

    Yeah. No. The losses in NSW will sink the Government, and QLD will just add into the fun. To be honest, the 2010 election sunk Federal Labor down to a very low level, so it might not go much lower.

    I also would be very surprised if Newman doesn’t have some good news lined up for early in the year. The first year is always about doing the painful stuff to get it out of the way so the memory fades. Already, now the public sector cuts are done and finished, it doesn’t garner news any more.

  14. H B Bear

    A little taste of what to expect (see from 4.20 onwards). Cuddly was certainly enjoying it.

  15. C.L.

    It begins…

    Breaking in The Australian: Gillard lays ground-work for another lie:

    JULIA Gillard is hedging on her return-to-surplus promise by citing out-of-date budget forecasts, amid calls by chief government whip Joel Fitzgibbon for the commitment to be abandoned.

    While not walking away from the pledge, the Prime Minister today declared she would “deal with the facts”.

    She said the facts she was relying on were contained in the mid-year economic and fiscal outlook, delivered in October, which forecast a $1.1 billion surplus based on an annual economic growth rate of 3 per cent.

    “I would remind you that the most recent Treasury forecasts published in the mid-year economic and fiscal outlook showed us at trend growth,” Ms Gillard said.

    However, national accounts released last week showed that the economy grew by 0.5 per cent in the September quarter, bringing the annual growth rate across the past six months down to 2.2 per cent.

  16. Skuter

    CL, ahem…

    But this statement in particular shows that our PM has no knowledge of economics or logic:

    She said the facts she was relying on were contained in the mid-year economic and fiscal outlook, delivered in October, which forecast a $1.1 billion surplus based on an annual economic growth rate of 3 per cent.

    So now she add her lack of economics skills and logic to her lack of morals, lack of ethics, lack of self-awareness and naievety to her *cough* impressive resume

  17. Rabz

    Watching Michael Kroger serve it up to the Goose when he concedes Lilley at the next election will be one of the highlights of a great nights viewing.

    Yep – the champers will be a’flowin’!

  18. michael

    prepping the electorate so they can blame the lack of a surplus on unforeseen circumstances instead of their own economic incompetence and out of control spending on bat shit crazy schemes.

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