What better way for Wayne Swan to address the growing chorus of criticism over the derivation of revenue projections for the MRRT than to conflate them with a new round of economic forecasts, just because, well, there’s a new Prime Minister.
Treasury has prepared the forecasts because of the imminent requirement, under the Charter of Budget Honesty, to release a pre-election economic and fiscal forecast. But as we saw in 2007, Treasury doesn’t wait the full statutory limit of 10 days after the issuing of writs to hand over. They’re ready to go the moment the Prime Minister heads to Yarralumla. Wayne Swan has decided to dip in a few days early.
The forecasts, showing a small improvement in the budget deficit in 2011-12 and a more solid surplus in 2012-13 than the previously wafer-thin $1b, suggest that, like the last days of its predecessor, this has not been a good government for cutting back recurrent expenditure. Nevertheless, outside its GFC-induced stimulus packages, it has been less profligate than the last term of the Howard-Costello Government, which failed to address Australia’s burgeoning structural deficit even as money flowed in from the resources boom.
Indeed, for all the anguish over the Government’s efforts at tax reform, in truth this has been an economically competent government, which acted decisively and effectively in relation to the GFC, and which timed its stimulus package, and subsequent withdrawal, very well. A better government would have addressed the structural deficit in its first and third budgets, but such a task would have been interrupted by the GFC.
Instead, Labor has set itself a challenge which no other government has succeeded at – maintaining a basic level of fiscal discipline over several Parliamentary terms. And it must do so under a new Prime Minister and a new Finance Minister. The once large gap between the experience of Kevin Rudd and Wayne Swan and the at-times comical efforts of Tony Abbott and Joe Hockey has been reduced significantly by recent events.
The fiscal rules to which Kevin Rudd committed, relating to restraining expenditure until the Budget returns to a surplus of 1% of GDP, are now more important than ever. Without a commanding figure like Lindsay Tanner in Finance, the temptation to rely, as John Howard did, on the money flowing from the resources boom will be great.
Check back to our website this afternoon for Bernard Keane’s analysis of Swan’s numbers.
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