Budget myths and reality

Wayne Swan:

At the centre of our challenges we face in this year’s Budget is the huge hit to government revenues we’ve taken since the global financial crisis.

receipts

Wayne Swan:

Over the past 5 Budgets and the recent mid-year review we’ve put in place more than $150 billion in saves, many targeted at addressing the structural challenges in the budget.

payments

So what is the net effect of all that? The underlying cash balance – showing the expected $20 billion deficit for this year instead of the $1 billion surplus reported in the MYEFO. (The data in the two graphs above show the original, now discredited, data from the last MYEFO).

cash balance

(HT: Inspiration from kingsley)

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31 Responses to Budget myths and reality

  1. C.L.

    Stunning lies from Swan.

    Straight from Obama’s evil playbook.

    Just lie.

    Simple as that.

    And rely on a lazy media not to notice or – more likely – care.

  2. C.L.

    Tim Mathieson phoned: said that barber’s pole had to be a good thing.

  3. .

    This shows why the stimulus was a failure based on lies.

    Revenue fell in 2008-09 and 2009-10, below trend.

    Yet on the bizzare GDP accounting framework, GDP (output) “rose”.

    Note that spending increased at above trend levels for those two years.

    Also, revenue in 2010-11 was below trend back to 2007-08, which it was of near an equal value.

    The stimulus could not have possibly of helped the economy.

  4. .

    I’ll be shocked of the deficit is only around 20 bn, given how spending is cracking on pre election and revenues are falling or non existent for some taxes, and 1000 businesses a week are shutting down.

    Five years of deficits – Ricardian equivalence is coming home to roost, and joe public isn’t taking it too well.

    62-38 2PP election result here we come.

  5. Gab

    A trip down memory lane…when adults ran the country:

    Mr COSTELLO (Treasurer) —The budget is in surplus in the next financial year, with a budgeted forecast cash surplus of $1.5 billion, the fifth consecutive surplus, the largest run of surplus budgets since before the Whitlam government. We are undoing the damage that was done by the Whitlam government—I think now generally acknowledged as Australia’s worst economic managers—and we are now going back to record some budget outcomes that we had not seen since the 1960s.

    As this House well knows, in its last five budgets the Labor Party accumulated $80 billion worth of debt. Let me just put this in context as to how you accumulate debt. The first thing you do is you run a deficit—that is, you spend more than your revenues. Then the Labor Party sold assets. But that still was not enough to cover the deficit. Then they went out, after selling assets, and borrowed on financial markets $80 billion. They expended the whole of the proceeds of their asset sales—back in the days when you were pro privatisation, Old Tiger—of the privatisation but still could not balance the budget and still went to the financial markets and borrowed $80 billion.

    One of the proudest achievements of this government is that, by the end of the forecast financial year, we will have repaid $60 billion of Labor’s $80 billion debt. That produces for the budget an interest saving of $4 billion a year, and that $4 billion can now be reinvested in tax reductions, it can be reinvested in the health system, it can be reinvested in building a better defence for Australia, it can be reinvested in strengthening our borders against plant and animal disease and it can be reinvested for pensioners and older Australians. Because this government did the work, we can now reinvest for the future. But I want to say this: having paid off $60 billion of Labor’s $80 billion debt, we are only three-quarters of the way there. There is still more work to be done, and this government intends to do it, to deliver good outcomes for the Australian people.

  6. Fisky

    No, the “revenues are gone”, the “credit boom is over”. That’s why the government needs to borrow credit and stay in deficit forever. Get over it.

  7. Gab

    Everyday the gillard government proves its critics correct.

  8. Fisky

    @CL – Labor MPs have been caught claiming that the budget is already in surplus. They are no better than Soviet statisticians claiming bumper harvests.

  9. They are no better than Soviet statisticians claiming bumper harvests.

    I would say they are a bit worse that is only an exageration unless there was no harvest, claiming a surplus is a straight out lie.

  10. NoFixedAddress

    but Sinc,

    he’s with the boss and you don’t know nothin… so there

  11. Cato the Elder

    But Fisky, the budget is in surplus! It’s only a forecast, after all

    It’s just that the forecast is crap and reality will be a deficit

    And since when did these turkeys care about reality?

  12. Fisky

    As Homer would say, the Labor budget is in structural surplus, even though it’s in deficit. Howard was always in structural deficit, even though he ran surpluses.

  13. NoFixedAddress

    a cousin of mine asked (fb) why we have 1,000 afghan folk locked up in detention.

    I will ask the same and is that the correct number?

  14. Cool and Unusual Punishment

    I’m please to hear they’ve “put in over $150B in saves“.

    How does Labor define a save? Easy.

    First, you blow enormous wads of cash on useless – even harmful schemes, blowing out total payments. A couple of years later, they privately acknowledge they’ve wasted enormous wads of cash on useless – even harmful – schemes, and agree to stop.

    Bingo! Savings!

  15. Rabz

    There is no way the deficit for the current financial year is going to be only $20 billion.

    The Coalition will run a forensic audit post election, as is required of them, given the indisputable record of shonky accounting and incompetence of labor and the treasury.

    I predict the deficit will be more in the vicinity of $50 billion, possibly greater.

    So where do these squandermonkeys get off ever having the gall to talk about being “responsible economic managers”, “committed to ongoing surpluses”, FFS?

    Oh and goose, cease forthwith referring to new taxes as savings, you indescribable f*cking imbecile!

  16. John

    Please can we have the dates for those Swan quotes.

  17. brc

    You can really see the gst effect kick in on the payments.

  18. Carlo

    Gotta feel sorry for Howard and Costello (and the Australian people…all their hard work undone in the blink of an eye.

  19. .

    As Homer would say, the Labor budget is in structural surplus, even though it’s in perpetual deficit. Howard was always in structural deficit, even though he ran nearly 11 years of surpluses.

    FTFY Fisky!

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  21. Gbees

    With your logic Fisky I’d never hire you. Probably the reason why you back a government intent on building a welfare dependent society. Dope.

  22. Louis Hissink

    Part of the reasoning behind the lefty view of economics is the belief that QE actually increases the price of goods and services, from which businesses then make greater profits which can be shared with the employees – workers. Ben Bernanke said as much in a 2002 speech.

    It’s moments like this that you need to sit down, pop a valium and pour a strong espresso normale.

  23. Unfortunately for the clown who said this budget was expansionary it is in fact contractionary.

    That is it is detracting from growth.

    If nominal GDP is well below trend and slowing you cannot get the budget into the black and nor should you.

    fiscal policy is a means to an end no an end in itself.

    you wish to impose greater contraction via the budget.

    So nominal GDP will get weaker and the budget deficit greater. good grief even Wayne Swan eventually understood this.
    no-one here does. So sad

    It really would help if at some time people around here got to understand fiscal policy instead of making fools of themselves.

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  25. Noah

    That bottom graph (underlying cash balance) should be taught in every classroom, should be the screen saver on every computer and the front page of every newspaper until all left wing Australians finally realise what left wing governments do to modern economies. If the GFC (apparently) explains the first 2 years of massive deficit, what explains the last few years? It’s easy to boast about school buildings and broadband when you have a $150B credit card. Give any Australian a credit card that large and 99% of them would do a better job with it.

  26. supercujo

    A $20bn reduction in cash balance deficit in one year is pretty good, even without making a surplus.

  27. harry of Vic

    Aaaaah Mr Magoo.. errh Mr Squanderer.. you’ve done it again.

  28. .

    Unfortunately for the clown who said this budget was expansionary it is in fact contractionary.

    That is it is detracting from growth

    Right Homer.

    So if it was “adding” to GDP, where would the debt lie? $200 bn?

  29. JC

    So nominal GDP will get weaker and the budget deficit greater. good grief even Wayne Swan eventually understood this.
    no-one here does. So sad

    Doofus, the central bank basically influences NGDP.

    Go away Homer, you’re fucking useless at economics. Always were.

  30. JA

    I believe its spelt “A-U-T-O-M-A-T-I-C S-T-A-B-I-L-I-S-E-R-S”…

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