An old co-worker once told me that he never reads the newspapers as he doesn’t want to read something written with less than a days consideration. Wise man. So this is the “one week consideration” version of my views on the 2011/12 federal budget.
The first strange thing about this budget is that everybody is talking about the 2010/11 budget balance (-$49.4 billion) or the 2012/13 budget balance (+$3.5 billion). This is understandable for political reasons. The Coalition want to point to the big deficit and Labor wants to point to a surplus. But the 2010/11 is old news, and the 2012/13 is an unreliable forecast. The actual cash bottom line for 2011/12 (the budget year) is -$22.6 billion. Given the current state of the economy, we should have a small surplus now and not a deficit, so the government has to lose a few marks on fiscal policy.
Total government spending for 2011/12 is predicted to be $365.8 billion, of which the biggest element is welfare ($121.9 billion) followed by health ($59.9 billion), education ($29.9 billion), and defence ($21.3 billion). Total cash spending is 4.3% higher than the previous year in nominal terms.
The savings that weren’t
Two annoying budget tricks is to add up multiple years and report a four (or five) year total, and to refer to taxes as “savings”. I don’t mind that politicians and bureaucrats play these tricks… lying is effectively part of their job description. But the sad thing is that the journalists just mindlessly report it. Either the journalists want to pass on the same lies as the government, or they are just incompetent.