At Crikey we’ve been enjoying Professor Judith Sloan’s transformation into a vengeful deity hurling thunderbolts at the Turnbull government, but the good prof appears either to have got muddled or — we think more likely — been the victim of some rotten subbing in Saturday’s edition of The Australian. Sloan slammed the government for “coming close to complete incompetence” on the budget but, in doing so, came a cropper herself:
“The deficit for this financial year — a period that covers Scott Morrison’s first budget and Turnbull’s first (financial) year as Prime Minister — is expected to be about $37 billion. It’s a pathetic effort and amounts to 25.8 per cent of gross domestic product, which is the same ratio as the previous year. Using the most optimistic assumptions about the growth of nominal GDP as well as company and income tax receipts, there is an expectation that the budget deficit could shrink to $6bn by 2019-20 or 25.2 per cent of GDP.”
Alas, the budget deficit is not 25.8% of GDP and isn’t shrinking to 25.2% of GDP — that figure is the current level of government spending and its forecast reduction in coming years (see Table 1). The budget deficit this year is forecast to be 2.2% of GDP. While we agree entirely with Sloan that it’s appalling a government notionally with “surpluses in our DNA” is still spending at almost the level that Kevin Rudd did in the face of the financial crisis, someone has got the wrong end of the stick.