Well, at least, Fairfax is trying to soften the blow:
Julia Gillard’s political troubles went from bad to worse on Thursday as her chief economic salesman first fluffed his lines on possible income tax rises and then quoted the wrong jobless number in Parliament.
For a government with a solid story to tell on the economy, Wayne Swan’s refusal to rule out income tax rises in the budget (since ruled out), and his ”mistake” in quoting the unemployment rate as 5.1 per cent instead of 5.4, sent government morale further south.
How good is that “solid story”? Heh. Tony Makin talks about the Commonwealth Balance Sheet in The Australian:
Curiously, unlike the standard budget deficit measure that is so often in the news, the government’s balance sheet has been all but ignored, even though estimates of its key elements were published in October’s mid-year economic and fiscal outlook.
According to the mid-year economic and fiscal outlook figures, net financial worth representing the difference between government financial assets and liabilities is expected to be minus $257.9bn or negative 16.9 per cent of GDP in 2012-13. This compares with minus $18.1bn, or only negative 1.5 per cent of GDP in 2007-08.
The rise in net debt liabilities driven by budget deficits, not falling asset values, overwhelmingly explains the transformation of the federal balance sheet during this time.
That is a very solid story – the government has been borrowing to finance consumption and not infrastructure as they keep saying.
The extent of Swan’s mismanagement can be seen in David Uren’s comment about the budget and MYEFO numbers (emphasis added):
Even on the most recent and now obsolete published budget numbers, Swan relied much more on revenue growth than on spending restraint than did the consolidations of his predecessors.
Uren has not been a consistent critic of the Rudd-Gillard government.
We’re also told:
WAYNE Swan’s proudest boast until last December was that his government had put in place “the fastest fiscal consolidation since at least the 1960s”.
Actually I’ve heard Craig Emerson repeating that lie in the last week. Our very own Judith Sloan deals with that argument:
I GUESS it’s a boy thing. Mine’s bigger than yours.
This was Wayne Swan’s claim about the government’s fiscal consolidation record. Sadly, it does not stand up to scrutiny – Keating’s and Costello’s were bigger.
If size is not everything, Swan boasted for a while about the speed of his government’s fiscal consolidation. He has had to drop this bit of bragging too, as it is not true.
Here is the fundamental problem:
The budgetary pickle in which the government is stuck is entirely of its own making. It failed to realise that the underlying tax base is unlikely to recover for years. It continued to spend when the economic imperatives had subsided. It irresponsibly shuffled spending and receipts between years, bringing some forward and deferring others, in order to keep the pretence of a surplus in 2012-13 alive.
And embedded in this creative accounting are some appalling decisions, such as moving company tax payments to a monthly basis.
As Judith says, we now need an informed debate about the actual state of the budget. That informed debate cannot involve Wayne Swan at all. Maybe it should not involve anyone in the current government. Unfortunately there is no institutional mechanism to force that discussion until the Pre-election Economic and Fiscal Outlook is released a couple of weeks before the election (mind you the Gillard government managed to contaminate that process before the last election).