Headlines such as
Joe Hockey says Opposition can’t promise a Budget surplus either
neglect the fact that starting points matter. Clearly if the budget is in deep deficit, and the sovereign debt level / GDP is relatively high, it is much more difficult to achieve a surplus, ceteris paribus.
Since the Coalition doesn’t know if, or when, it might next be in Government, it cannot promise to deliver a surplus for the present financial year – after all it may still be in opposition on 30 June 2013. We don’t know the true state of the budget – there could be hidden contingent liabilities and contractual issues that further undermine the budget.
But we do know this. If we could return to December 2007 and have in place ANY government other than Rudd/Gillard, than 2012-13 would be in surplus. A Barton Government, yes, a surplus. A Hawke Government, yes, a surplus. A Whitlam Government, yes, a surplus. Any competent government that had been in office since December 2007 would have no difficulty in achieving a surplus in 2012-13 when our terms of trade are so high. It takes a remarkably incompetent government to manage a deficit under those circumstances.
The next government will have to deal with the legacy that is Rudd, Gillard and Swan. Unless there is a time machine out there?