Tagged: Economics

Trajectory to surplus not the same thing as budgeting for a surplus

As I mentioned to Pat Hession on Townsville ABC radio yesterday afternoon, the 2015-16 Federal Budget simply kicks the can down the road, as they say, leaving it for a future Government (or this one if it stays in power) to make the hard decisions necessary to truly repair the budget (see my post on Queensland Economy Watch from May 12). A trajectory back to surplus is not the same thing as budgeting for a surplus, and there is no surplus over the forward estimates, just a steady fall in the deficit – a fall which may not occur as projected, as new budget pressures emerge in coming years and the Government commits to new expenditures or renews old programs.


A steady hand

This time last year, we noted that the budget was one of pretend austerity. Much of the debate following the budget then pretended that the austerity was real. It was not real austerity then and it is not real austerity now. In Chart 1 below, drawn from Statement No.10 page 6, we see the payments of the budget as a percent of GDP. Last year the budget was for year 2014/15.