Loose lips sink ships… or budgets

27/04/2020 Posted by admin

Scott Morrison has been forced to play down talk of a ‘Christmas’ budget full of ‘goodies’.The skill of a ‘good’ budget is massaging expectations.

If government ministers say too much in the run-up to the big day, there is scope for disappointment, or just a general shrug of the shoulders among voters when predictions are met.

But at the same time, there has to be some budget build-up, for fear it will pass without fanfare – a missed opportunity for a government wanting to show off its economic prowess.

Government’s tend to dribble out a few initiatives ahead of the budget while giving an overall flavour of what to expect.

But in the main, it is usually tight-lipped stuff.

Finance Minister Mathias Cormann, for example, has turned batting away budget inquiries into an art form.

So it was no doubt a shock for Scott Morrison to see himself depicted as Father Christmas on the front of The Daily Telegraph this week.

New Nationals Leader Michael McCormack told the tabloid the treasurer would bring down an “unprecedented” pre-election budget with a bag “full of goodies”.

But the treasurer was quick to hose down suggestions he had turned into “Scott Santa Claus Morrison”, saying the budget would be responsible.

“This budget – like the budgets of households all around the country – needs to continue to exercise the restraint that has been so important in ensuring that we bring that budget back to balance in 2020/21,” Morrison said during a series of appearances to kill-off the Christmas comparisons.

Aside from raising the expectations, Acting Prime Minister McCormack appears to have blabbed that this would be the final budget before the next election.

That’s despite the government repeatedly indicating it would be held well into 2019, suggesting there could be one more budget after this.

At the same time, suggestions this could be a giveaway budget may have raised a few eyebrows among credit rating agencies.

Standard & Poor’s, for example, still has Australia on a negative outlook, meaning it could lose its top-tier triple-A rating should there be slippage in restoring the budget to balance.

The fall-out from a credit downgrade would be highly embarrassing politically, and would also increase the cost of raising funds abroad for Australian banks, which could result in their customers having to pay higher interest rates.

What seems clear is that infrastructure spending will be a cornerstone of Morrison’s third budget, and perhaps why McCormack was so excited as the infrastructure minister.

So excited he told reporters the government had been able to put a record amount of money into roads and rail because it had managed the budget well, and would be able to pay down “Labor’s debt” in 2020/21.

Of course, there is no chance of the government paying off an outstanding $523 billion of debt in that timeframe, whether it be Labor’s or its own. It is actually forecast to rise to $583 billion in three years time.

He obviously meant deficits, but even then Labor argues deficits are eight times larger than predicted by former treasurer Joe Hockey in his first budget.

However, McCormack is not alone with such financial mistakes.

His predecessor Barnaby Joyce would frequently get his “gross” and “net” debt or his millions and billions muddled-up.

Even when he was shadow finance minister.

Australian Associated Press

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