Surplus unlikely says Swan.

[Rorschach]

Julia Gillard breaks third promise as $1 billion Budget surplus axed
* by: Phillip Hudson
* From: Herald Sun
* December 21, 2012 12:00AM

On April 14, 2011, Prime Minister Julia Gillard said: "You can't run this country if you can't manage its Budget".

THE Gillard Government has dumped its sacred election promise to deliver a Budget surplus, saying it would have put jobs and the economy at risk to try and keep it.

The broken vow comes after Julia Gillard abandoned the "no carbon tax" pledge and scrapped her opposition to Pacific Island detention centres for asylum seekers.

Announcing the embarrassing backdown, Treasurer Wayne Swan blamed a $3.9 billion "sledgehammer hit" to revenue between July and October caused by weak company profits.

He won praise from economists, business leaders and the Greens, with top Budget watcher Chris Richardson saying it would have been "dumb to chase the surplus and damage the economy".

Credit rating agency Standard & Poor's said it would not change Australia's AAA credit rating.

But Opposition Leader Tony Abbott said the announcement in the shadow of Christmas was another failure by Labor that showed it could not be trusted to manage the economy or tell the truth.

Ms Gillard and Mr Swan had repeatedly said the surplus was a "guarantee" and would be delivered "come hell or high water" because it was vital to taking pressure off the cost of living. Last year the PM said "you can't run this country if you can't manage its Budget".

Mr Swan revealed he had a long discussion with Ms Gillard, who is on holidays, and other ministers before revealing the surplus was now "unlikely".

"I don't think it would be responsible to cut harder or further in 2012-13 to fill a hole in the tax system if that puts job or growth at risk," he said. "If the worst thing that people say is we got the economics right again but fell short on the politics, well I just say, so be it." What he's saying is he can't do that without killing us and the economy.

Mr Swan, who has already slashed welfare for single parents, made cuts to the baby bonus and curbed the private health insurance rebate to protect the surplus said it was not in line with Labor values to pursue more cuts.

The Treasurer, who has not delivered a surplus in his five Budgets, said the "aftershocks" from the global financial crisis that had wiped $160 billion from revenue over five years were still being felt.

The most recent update of the Budget just two months ago had predicted a $1.1 billion surplus, down from the $1.5 billion announced in the May Budget.

Economists now believe that it could be a deficit of $10 billion.

Mr Swan refused to say what the projected deficit was likely to be, saying Treasury officials would have a look with "a fresh set of eyes in the new year".

He rejected Opposition claims it was due to wasteful spending, saying spending was down by $1.3 billion and every dollar spent since mid-2009 had been matched by a cut.

Mr Swan said the Government was still committed to revealing how it would pay for increased education funding and the rollout of the National Disability Insurance Scheme in next year's Budget.

Mr Abbott said after boasting for three years about the surplus, it was another failure by Labor.

"You just can't trust this Government to manage the economy and you just can't trust this Government to tell the truth," he said. "For three years they've been saying that this surplus was the badge of their economic credibility. Well, they don't have it any more."

Shadow Treasurer Joe Hockey said Labor was trying to cover up its wasteful spending by "taking out the garbage five minutes before Christmas".

[wog_girl]

How the hell can a surplus relieve the cost of living pressures if you're slashing spending like a maniac to try and get a surplus? In this current economic climate, surpluses should be the last thing on a government's mind. Spend wisely to stimulate the economy, fuck even George W Bush worked that one out.

[IQS.RLOW]

The govt should have been in surplus years ago

[Leftwinger]

The govt should have been in surplus years ago

No, wog girl is correct.

The government have done the right thing - as politically dangerous as it was to do - and abandoned the push for a surplus that the economy does not want to allow them. Government can influence the budget outcome but cannot really control it. We, the private sector have determined through the aggregation of our spending and saving decisions that it is not presently possible for the budget to move into surplus, just as we determined that the Howard government could do it year after year, by gorging ourselves on privately-held debt for a decade. This was a historical anomoly which is now done with.

I think that Hockey might be slightly more switched on than his clueless buffoon of a boss - while Abbot trumpets flatulence, Hockey is backing away...

The federal coalition appears to be backing away from its pledge to deliver a budget surplus in every year of its first term in office.

Opposition Leader Tony Abbott on Thursday said there would be a surplus "in every year" of an incoming coalition government, based on current Treasury figures.

Mr Abbott made the call after Treasurer Wayne Swan conceded it would be "unlikely" that Labor could honour its promise to bring the budget back into the black in 2012/13.

But opposition treasury spokesman Joe Hockey was more cautious than Mr Abbott when asked on Friday if he could guarantee a coalition government would deliver surpluses during its first term in office.

"This is the difference between Wayne Swan and myself or (between) Julia Gillard and Tony Abbott," Mr Hockey told Sky News.

"We're not going to make promises that we cannot keep.

http://news.ninemsn.com.au/national/201 ... e-stimulus

Hockey is sweating - he knows that if his party wins office in the new year, he will be the poster boy for attempting to deliver the undeliverable.

Anyway, it's now up to the public to come to terms with the fact that surplus=good/deficit=bad is a simplistic dichotomy that often does not hold true and that governments should be judged primarily on economic growth and employment growth outcomes, not abstract accounting identities. Deficits in the main are here to stay - get used to it.

[IQS.RLOW]

Hockey is sweating because he is unable to see how badly the ALP have cooked the books so far.

The govt has record terms of trade and tax receipts nearly 10% higher than last year. The inability to deliver a balanced budget after all their fiddling of the books and year on year attempts to paint themselves as fiscal conservatives, right up until 4 days before the Gooses embarrassing, tail between the legs display is laughable and all they have done is reinforce that the ALP cannot manage the Australian economy...ever

[IQS.RLOW]

Here's a nice little link to an xls file that shows govt debt and revenues over 30 years
http://michaelsmithnews.typepad.com/fil ... t-debt.xls" onclick="window.open(this.href);return false;

The ALP presided over MASSIVE revenue yet still managed to fuck it up

[Leftwinger]

Total revenue growth is the dark blue line that has been trending downward since the middle of last year in your link.

Yes, revenue has been growing - at a rate significantly weaker than pre-GFC. Tax as a proportion of GDP is the lowest it has been since the recovery from Australia's sharpest post-war recession (1990). Revenue growth is simply rather lacklustre and deep cuts to government spending would likely accentuate that by causing the economy to slow further.

Our terms of trade have been in decline for some time and are currently around 14% below the peak as commodities have come off the boil.

Your insinuation that a tsunami of revenue has been pouring into the governments coffers has no basis in fact.

The conditions necessary to push the government budget into surplus are not currently present for the Labor government and they are unlikely to present themselves for the Coalition, should they win office in the new year.

[Leftwinger]

On a related note, the WA LNP have conceded that they are likely to head into deficit (projection only at this point in time).

WESTERN Australia's budget will fall into deficit for the first time in more than a decade, the State Government's latest predictions show.

Mr Buswell blamed falling revenues - mainly a drop in iron ore prices - as a major reason for the government's shaky economic position.

http://www.perthnow.com.au/news/western ... 6541913037
On the face of it, I tend to agree with Buswell on this. He is simply copying Swan and truthfully conceding the actual situation.

So if Australia's big boy of resources is taking a hit on resource revenues, it's unlikely that the MRRT is going to pour huge sums of revenue into the feds coffers. As I understand, it mainly only kicks in over $130/tonne for iron ore and the price has spent very little time at that level since it's inception in July.http://www.indexmundi.com/commodities/? ... y=iron-ore

But the public has been conditioned to see only the simple surplus always good/deficit always bad dichotomy and until this changes, the issue remains a political football.

[Leftwinger]

Another state coalition government is also having surplus problems.....

Qld budget deficit blows out by $400 m

Queensland’s economic outlook has deteriorated this financial year, with the budget deficit blowing out by $400 million, mostly because of lower-than-expected coal royalties.

http://www.afr.com/p/national/qld_budge ... OtVVjQ2rEK (full article is subscriber)

If these states pursue austerity themselves in hopes of turning a surplus, it will be a larger drag on the federal budget again.

[IQS.RLOW]

It's a shame you never addressed the most important and high growth area of the chart that impact the biggest on the bottom line...I wonder why you would do that?