No doubt the focus groups have been consulted and the slogans are already upon us. Tony Abbott:
“I am absolutely convinced that on budget night it will be seen as responsible, measured and fair. It is a budget which is going to deliver jobs, growth and opportunity.It’s a budget which is going to make Australians feel more optimistic and confident about their future”. (Emphasis added)
Bill Shorten was not quite so smooth in his doorstep:
One, is the Budget about the future? Two, is it honest and responsible? And three, is it fair? (Emphasis added)
He was summarising what he’d just said in a speech to Sydney University’s McKell Institute, so it wasn’t off the top of his head. Later he added the further line of attack that the budget would be about the Abbottistas trying to hold onto their own jobs:
“We’ve said they should be responsible and fair, and should be about the future, not a nip and tuck here and there where they’re desperately trying to hold onto their jobs in the caucus room.”
We know that Hockey won’t be honest about Labor’s legacy. As I pointed out in this post, inter alia, Hockey has consistently used the Mid-Year Economic and Fiscal Outlook (MYEFO) of the 2013 budget, rather than the Pre-Election Economic and Fiscal Outlook (PEFO). The trick is that between PEFO in August 2013 and MYEFO in December, Hockey had added $68 billion to the deficit over the forward estimates. This was claimed by Chris Bowen and verified by ABC FactCheck:
Meanwhile the revenue prospects are deteriorating. According to Chris Richardson of Deloitte Access Economics there are two biggies. Firstly, incomes are growing more slowly than usual. This will cost the government $900 million this financial year, jumping to to $5.4 billion in 2015-16.
The other problem of course is commodity prices. Overall:
- Access estimates total revenue write-downs due to commodities, wages and other factors will see $5.2 billion in revenue disappear this financial year and “an ugly $10.8 billion in 2015-16”.
For the budget outlook:
It forecasts $154 billion in deficits for this and the next three financial years, which is $47 billion higher than the four-year deficit outlook in the December update.
It forecasts a deficit this year of $45.9 billion, up $5.5 billion from the December update, and $45.3 billion next year, up $14 billion from December.
So the $68 billion has become nearly $100 billion. Nice work, Joe!
Then there is the small matter of $27 billion worth of savings stuck in the Senate. Are these going to be simply rolled over and appear as a false positive on the ledger?
Hockey has said that the budget will show progress towards a surplus and the deficits will improve as a percentage of GDP. This is reminiscent of the Intergenerational Report, which under the “Currently Legislated Policy” scenario saw a deficit of 6% of GDP in 2055. [Update: The phrase is “a credible path back to surplus”.]
Some economists are warning that interest rates are so low that an interest rate cut is unlikely to have any further stimulatory effect, so stimulation would need to come from budget spending. Clearly in the case of a real GFC-style downturn, this option no longer exists.
It is said that Mark Textor’s advice to Campbell Newman was to be dull and boring then go to the polls early. That worked well! Abbott is already talking up the dull bit. What if he’s getting the same advice from Textor? If Shorten is right and Abbott really is about saving his job he might choose the double dissolution track. Apparently he thinks he can win an election if the polls are only 52-48 against him.
If politics is the bottom line, strange things can happen!
Update: On the radio this morning, I gather Newspoll is 52-48 and there was talk of an election.