Wednesday, 1 May 2013

The budget deficit and reported decline in revenue explained

In Labor in a budget quagmire of its own making Greg Jericho looks at the changes in revenue and spending over the last few budgets and compares them to the situation in the nineties. As usual there are plenty of graphs to back up his reasoning.
This week the budget situation is being spoken of in grave terms. News articles are full of dire prognostications, the Prime Minister is being sombre, and the opposition is free to run every scare campaign it wishes.

But back in the 2009-10 Budget - the first after the GFC had smacked the bejeezus out of the revenue - Wayne Swan predicted by 2012-13 that the budget would be in deficit of 2 per cent of GDP. Back then we weren't expected to return to surplus until 2015-16.
In reality its predictions of the budget situation were pretty much on the money - perhaps even too conservative. But a year later the Government in a misconstrued desire to win the race of economic management through achieving speedy returns to a surplus, shifted the goal from 2015-16 to 2012-13.

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