The ALP make this claim.
The Federal Labor Government’s responsible economic management means Australia’s national budget will return to surplus in three years time and three years ahead of schedule. That’s despite the fact the global recession stripped about $110 billion from government revenue over five years.
So we’re invited to believe that the debt and deficits are something that just happened – no mention of all the reckless spending.
Milton von Smith has trawled through the budget papers and tabulated all the increased spending decisions made by the ‘this reckless spending must stop’ Rudd-Gillard government.
That looks like a massive increase in spending to me.
In the absence of Rudd and Gillard’s reckless spending decisions, the 2010-11 deficit would be $26.3 billion smaller – and that is not including spending programs that have been allowed to blow out due to lack of ministerial oversight. This would have been the lower bound of the starting point under a Coalition for the 2010-11 Budget.
The figures also show that that since coming to office, Rudd and Gillard took decisions to increase spending by a total of $113.6 billion between 2008-09 and 2011-12.
I did a slightly different exercise – looking at how well the Rudd-Gillard government did by their own standards. It has handed down three budgets and so we can look at performance in two. In the 2008-9 budget the government forecast a surplus of $21,703 million and delivered a deficit of $32,114 million. The differential is explained by policy decisions (an increase in spending) of $33,384 million and parameter variations of $20,433 million. So factors that include unexpected drops in revenue and changes in forecast factors and so on, did not explain the full change in budget position.
In the 2009-10 budget the Rudd-Gillard government forecast a deficit of $57,593 million and delivered a deficit of $57,079 million. That looks good – they did better than expected, until you look at the detail. That difference is explained by increased spending of $2,640 million (policy decisions) and then offsetting parameter variations of $3,153 million. So the budget performed better because the world wasn’t as bad as they had first thought it would be.
That is the story here. Spending has driven the budget into deficit. As Lenore Taylor and David Uren have argued.
The government and Treasury had expected collapsing businesses to drag the economy into a long recession, but instead the shock caused by the collapse in world trade and the panic in financial markets passed after a few months, leaving the corporate sector largely intact. The government was left completing large stimulus projects that were no longer really needed.
If the government had left monetary policy and the automatic stabilisers to do the heavy lifting our budget would be a much better shape.