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Editor's note
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Christmas has a way of crystallising reality.
On December 20 2012, five days before what would be his last Christmas as treasurer, Labor’s Wayne Swan called a press conference to admit what he had spent five years denying. The budget wasn’t going to return to surplus in 2012-13 after all.
“Obviously, dramatically lower tax revenue now makes it unlikely that there will be a surplus in 2012-13,” he said. “A sledgehammer hit our revenues.”
His Coalition successor, Josh Frydenberg, did much the same thing on Monday. Net government debt was not going to fall to zero over ten years as he had promised, the surplus was going to shrink rather than grow, economic growth was going to be much lower than he had previously forecast, and wage growth was going to begin with a “2” for the foreseeable future rather than the 3.5% every previous budget has promised for half a decade.
While welcome, the concessions might not go far enough.
This morning Danielle Wood points out that to achieve even the small and diminishing surpluses the government is continuing to promise, Frydenberg will have to cut real spending per person in each of the next four years, something that hasn’t been done since Labor’s Paul Keating was treasurer in the late 1980s and brought on the early 1990s recession.
Stephen Bartos a former deputy secretary in the Department of Finance, says the surplus projections also rely on taking no account of likely extra spending on the new government agency to be known as Services Australia, on aged care in response to the as-yet-uncompleted royal commission, and on what might be more frequent and costly disasters as a result of climate change.
In this morning’s podcast Michelle Grattan puts these questions, and questions about the state of the economy at year’s end, to Finance Minister Mathias Cormann and Shadow Treasurer Jim Chalmers.
P.S. If you’ve enjoyed The Conversation this year, consider donating today and helping safeguard quality journalism in 2020 and beyond. The best way you can support us is by a monthly donation of whatever you can afford.
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Peter Martin
Section Editor, Business and Economy
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Top stories
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On one hand, we’re still able to forecast a surplus. On the other, conditions are deteriorating. Treasurer Frydenberg and Finance Minister Cormann deliver the news.
Lukas Coch/AAP
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Lukas Coch/AAP
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AAP Image/Supplied, DFES Incident Photographer Lewis van Bommel
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