If Treasury secretary Martin Parkinson was present yesterday in the budget lock-up, he was kept well hidden. Former treasurer Peter Costello and his department were famously at each other’s necks, but the relationship between the current Treasurer and his chief bean counter has been surprisingly solid throughout Labor’s time in office.
As Stephen Mayne never got tired of documenting, the public service has a variable record in predicting budget surpluses or deficits, as can be seen in this table. The figures are revised every year, but this is based on the historical underlying cash balance in this year’s budget papers.
The tale of the last six years is a curious one. Where once Treasury consistently undercooked the outcome by about $5 billion, the 2008-09 global financial crisis — when the department overcooked the outcome by a massive $48.71 billion –means that on average over the 17 years since the start of the Howard government Treasury is now erring to the upside by $2.24 billion. If it continues that form, Swan’s $18 billion deficit prediction for 2013-14 will actually come in at $20.24 billion.
But strip 2008-09 out of the series and a somewhat different story emerges. Treasury, on average, undercooks the non GFC years by some $800 million — an amount conservative accountants would wholly endorse. And it’s really not that much in the context of a total budget now approaching $400 billion.