Economy

Nov 29, 2011

MYEFO: Swan cuts to save the thinnest of surpluses

The government has unveiled a range of spending cuts but they won't stop a big blowout in this year's budget deficit.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

The government has unveiled a net $7 billion worth of spending cuts to shore up its budget and honour its commitment to surplus in 2012-13 in the face of lower revenue from an economy affected by deteriorating global conditions.

10 comments

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10 thoughts on “MYEFO: Swan cuts to save the thinnest of surpluses

  1. Jim Reiher

    What never ceases to amaze me is the starting assumption that so many just believe: that we need to have surpluses.

    So long as the debt one has is manageable, then there is no problem with debt. Can you imagine any household in the country not doing things that get them into debt? Any business? But if that household or business can pay the repayments and get the debt down over time, all is well.

    Once again our politicians are playing to the popular mythology: this time it is “debt is bad and we must have a surplus”.

    So play the pea-and-thimble trick… big deal. I dont mind us not having a surplus. In fact, if we can pay the debt, if our capacity to repay is there, then really…. what a lot of hot air.

  2. Whistleblower

    If the government has brought forward expenditure to preserve the 2012/13surplus the key indicator will be the amount of government borrowing necessary to prop up its programs compared to forecast. Increasing expenditure this year financed by borrowing to give the appearance of a surplus in the following year would be a true pea and thimble trick.

    Whilst believers in the Magic pudding think you can go on borrowing indefinitely, the current situation in Europe and the US shows that this is not the case.

    One must commend the government if it is finally coming to the realisation that its expenditure programs in the long run must fit within the taxation levels that the country is prepared to tolerate even if it does indulge in chicanery to present an illusion.

  3. dfgdgdf

    End the baby bonus completely.

  4. mikeb

    @Jim is correct. There is nothing inherently wrong with a deficit, and conversely a surplus is not the Holy Grail. You have to spend money to make money – the trick being to spend wisely. Baby bonus is an example of unwise spending, whereas the NBN is something that the country will be reaping rewards on for many decades to come. It’s a pity that Swan & the government have been sucked into the coalition’s dogma.

  5. shepherdmarilyn

    It’s funny how governments encourage debt for housing but hate debt for services.

    I note that DIAC has not had it’s prison budget slashed.

  6. david

    How refreshing to see a Treasurer and Govt telling it like it is, as opposed to an Opposition led by liars in their leadership and economy areas (amongst many others) who have misled the country regarding an 11 billion dollar black hole pre election 2010 and a massive 39 billion black hole in current spending to support ridiculous, sort of, policy. To see the 3 stooges, Abbott, Hockey and Robb give a press conference in front of 3 light weight inexperienced journalists on an economical heavyweight budget was not only laughable it showed how these 3 are totally ill equipped to handle serious questioning and to cope with today’s economic situation.
    There contribution today, same old same old, pink batts, school buildings, NBN, carbon pricing…yesterdays men living in their idol Howards past.
    To listen to Abbott proclaim the 3 x triple AAA ratings were down to Howard and Costello is beyond funny, it’s pathetic.

  7. Jim Reiher

    Indeed David, if they were right, then Mr Costello should have got that “best treasurer award” a little while back, not Mr Swan!

  8. Dogs breakfast

    Politically they could have used this as an excuse to get rid of some dreadful decisions of past and present governments, and done in on the basis of tightening of the belts, ‘we’re all in this togethr’ Jim Hacker type pronouncements.

    Baby bonus, flick that, negative gearing beyond the actual income of the so called investment, gone.

    No income tax for superannuants earning less than a gazillion dollars – gone.

    This government is still politically bereft. Jaysus, everybody now recognisses what a crock the baby bonus is.

    So much low hanging fruit, so little courage.

  9. Hugh (Charlie) McColl

    Jim Reiher, your starting assumption is that the surplus is about economics. I don’t think it is. This surplus, for this government, is about delivering on a critical political undertaking. If they can nail the surplus by cutting government spending and still avoid a recession, Julia Gillard will deserve to get re-elected. The low hanging fruit can wait.

  10. Jim Reiher

    Hugh – you raise a good point. It probably is more about keeping her promise, in that area, than purely about economics. Mind you, if the world does fall into another GFC, I would rather she deferred keeping her promise and help keep us out of recession, than “keep it at any cost”.

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