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I'm a Treasurer, Get Me Out of Here

Nick Bryant | 10:08 UK time, Wednesday, 13 May 2009

So a big night in Canberra - yes, there is such a thing - with the government revealing its long-awaited and heavily-leaked budget.

Broadcast in the east coast evening, the annual budget is the closest thing Australia has to the State of the Union address, although the treasurer takes centre stage rather than the Prime Minister.

Wayne Swan announces the budgetWayne Swan is a nervy and hesitant figure, and not a natural prime-time performer. So for television viewers, whose normal programming was interrupted for the night, this was less "Australia's Got Talent" and more a case of "Australia's got a whopping deficit." Or perhaps "I'm a Deeply Indebted Treasurer, Get Me Out of Here".

The budget has gone from a $A22 billion surplus to a $A57 billion dollar deficit, the biggest year-on-year turn-around in the nation's history - though ludicrously the treasurer did not use the word "deficit" throughout his 3,700-word speech.

This is a famously plain-speaking and straight-talking land. Surely people are grown-up enough to cope with the word "deficit".

As elephants in the room go, this one could hardly be much bigger after all.

Much of the post-budget commentary has focused on Mr Swan's projections that Australia will be back in the black by 2015-16, and the optimistic growth forecasts that assessment is based on. Though he predicts the Aussie economy will shrink by 0.5% over the next financial year, he reckons it will rebound to 2.25% growth the year after.

The dean of the Australian political press pack, Paul Kelly of The Australian, notes: "This budget is a portrait of an optimist in the middle of a nightmare. The world faces its worst economic contraction since the Great Depresssion, but Wayne Swan is a convinced optimist who has produced a budget for optimists" The paper labels it a "Wing and a Prayer" budget.

Australian newspapersPeter Hartcher, The Sydney Morning Herald's political editor, suspects the country can look forward to "indefinite indebtedness", while Piers Ackerman of The Daily Telegraph suggests the Rudd government has "drifted into fiscal fantasy".

Here are some of the other headlines:

• unemployment is expected to rise to 8.25% next year, and 8.5% the year after. Currently it stands at 5.4%.

• skilled migration takes another hit, with a reduction of a further 25,400.

• the retirement age will be lifted progressively, reaching 67 by 2023.

• there will be an extra A$ 1.3 billion over the next six years to combat people smuggling.

• Sydney is the big loser in terms of infrastructure spending, which picks up on previous blogs. There's a suspicion that the Labor government in Canberra simply does not trust the Labor state government in New South Wales to deliver major infrastructure improvements.

You can get the full details at all the major news websites. ABC, for instance, has now launched an Australia in Recession special site.

Overall, the budget was nowhere near as tough as the government had warned. As George Megalogenis wrote in The Australian: "No voter, other than someone on more than $A150,000 a year, can look at last night's savings measures and say: 'Wayne Swan is coming after me'."

PS: The story which threatened to overshadow the budget was the revelations contained in the ABC Four Corners programme broadcast on Monday night (you can watch it on the web ) which has embroiled the game of rugby league in more scandal. I'll blog on that later in the week....


Comments

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  • 1. At 11:32am on 13 May 2009, hubbletree wrote:

    I listened to parliamentary question time today, most of it covered the budget.

    I thought the PM's response to the opposition's question on why there was a large deficit was a good response, mainly that the majority of it was actually due to falling tax revenue, and that the opposition would not do any better regarding debt at this time, and have yet to release an alternative plan of their own.

    All parties are feeling the pressure of current economic times. The opposition rightly has a reluctance to engage in specific points of the issue, I think there is a feeling that there are no easy solutions.

    We're all going to have to work hard to pull ourselves out of the downturn to turn it into an upturn. Crashes happen very quickly, recoveries can only be achieved by just solid hard work over the upcoming years.

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  • 2. At 12:24pm on 13 May 2009, Floyd wrote:

    I like this blog, but today's entry has a bad habit of blandly quoting commentators without explaining where they're coming from. The Australian is an extrememely biased Murdoch paper with a strong neo-conservative slant. I'm not saying you shouldn't quote them, just that it would be better to do so with a grain of salt

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  • 3. At 1:22pm on 13 May 2009, TrnOvrANwLeaf wrote:

    I know the Government has to inject a truckload of money to buoy up the economy but I wince to think that I'll have to repay this debt during the prime time of my life.

    I don't mind we further cut skilled migration. The Government has to make sure its present citizens put food on the table first.

    It was a smart move to skim off what the rich minority has. Not many votes are smudged.

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  • 4. At 1:59pm on 13 May 2009, newsjock wrote:

    It sounds as if Mr Swan is doing an Alistair Darling, making ridiculously optimistic forecasts for the years ahead.

    All but the most stupid politicians (aye, and they're not a rare breed in the UK) must realise that optimism goes hand in hand with deceit where financial predictions are concerned. The voters are NOT fools AND we have long memories.

    Give the public unbiased predictions. We won't like the news, if we hadn't already guessed it, but we will at least retain some respect for the messenger.

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  • 5. At 6:28pm on 13 May 2009, cynical1too wrote:

    -the annual budget is the closest thing Australia has to the State of the Union address-
    Why is everything Nick Bryant writes slanted towards, or compared to the U.S.? There is a Commonwealth Nick, and we all do have budgets.

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  • 6. At 7:18pm on 13 May 2009, ghostofsichuan wrote:

    Australia is in the same boat as everyone else, this is a worldwide problem. It seems that the leaders of many countries have decide that there is a physchological problem with the citizens and the best way to change that is to be optimistic. This is the message coming out of the U.S. and the U.K.. The governments seem to miss the point as to why citizens are not spending. Retriement plans have been devastated, lack of confidence in government and a lack of confidence in the financial industry and lastly, no one seems willing to explain how all of this happened and certainly no one willing to take responsibility. Like a man who cheated on his wife they just want us to pretend it never happened and we shouldn't be upset that a lot of money was spent to give the girlfriend jewelery. Politicians are actors and they are busily writing a new play....this one with a happy ending, at least in the first draft. The tickets are being bought on credit.

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  • 7. At 02:54am on 14 May 2009, Doofusinsyd wrote:

    I've just returned from holiday in Europe. While I was in the UK, the UK Labour party delivered their own budget. Curiously (IMHO), very similar outcome and comments there as ours in Australia. Had me wondering if they were sharing notes.
    If anything though, opinion in the UK is even more scathing.
    1) Historically largest deficits.
    2) Most agreed the growth estimates on which the very foundations of budget projections rested, were "fantasy".

    I've not done the numbers but suspect the UK was even worse than Australia's... Their chancellor imagined, somehow, that they would grow next year, but like Australia's imagined a rapidly returning, large and prolonged growth over years.
    Australia never had the deficits the UK does... but now we sure bloody do!! The deficit would be much less if Oz Labour didn't blow the 20bill surplus in a few months on nohting anyone can point to. A$900 handouts? rubbish, did very little for retail - several boatloads of BluRay players doesn't do much for jobs...

    Good coverage Nick, think you make good points and summary on this one.

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  • 8. At 05:52am on 14 May 2009, louiseobrien2065 wrote:

    I am not concerned about the budget deficit because, before long, China will be buying Australia's mineral resources again at a rate of knots and this will bring us back into the black. Also regarding the retirement age being increased to 67, people are living longer and are healthier than they used to be so they will be able to work for longer.

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  • 9. At 06:51am on 14 May 2009, Freakontheguitar wrote:

    Of course everyone is screaming about the size of the deficit, the time it will take to pay it back, and the fact that Rudd & Co started off with a comfortable surplus inherited at the time the opposition became the opposition.

    But I guess that no decent government could manage to stay in the black under the current circumstances. $57 billion is a lot of money, but how much is it really? What is a reasonable deficit for the type of economic crisis we are in? What does 'paying back' really mean? What can I not have or do until this is paid off and how does that compare to what I could have or do under an alternative budget? And what is the alternative?

    To be honest, as a non-economist I really don't have the faintest idea.

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  • 10. At 12:40pm on 14 May 2009, davebandit wrote:

    this obvioulsy isn't just an Australian issue, but from a global point of view it appears that most governments very much hope you will be dead before you can claim your pension. bring about a strange and unusual strane of flu maybe to ensure this happens perhaps... am I just synical?

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  • 11. At 1:48pm on 14 May 2009, dungutti wrote:

    Compared to the rest of the world Australia is sitting pretty. The debt level is predicted to reach around 13% of GDP and at the moment sits at around 4.5% if you compared this to countries like Japan 193% and predicted to reach 225% next year, the US predicted to reach 99.5%, Italy 118%, UK 76%, Germany 77% and France 79%. If you look at the debt realistically is like borrowing 13000 dollars when you earn 100000 so i think people should go and have a look at there own debt before criticising the government. Also I think the softness of the budget indicates we may be heading for an early election and the predictions are very optimistic as we are a long way from out of trouble yet .
    P.S Quoting Piers Ackerman come on Nick i thought you were better than that, he is the most bias journalist in Australia, according to his view of Australian politics, Liberals=good and Labor=bad.

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  • 12. At 10:18pm on 15 May 2009, Oz Dave in London wrote:

    I read recently that Mr Turnbull & Mr Brown may not approve the budget, could we have a double dissolution on our hands or a constitutional crisis or even a real debate and exchange of policy? Alas, I fear not, Mr Brown will capitulate eventually as he always does, talk tough, actions weak


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  • 13. At 01:17am on 18 May 2009, Eliza_nsw wrote:

    Ive said it before and now saying it again. Labor are useless at ecomonics and in Govt. Dudd, Goose & Cricket are leaving us in a huge mess. If we owe the Chinese Govt from all the borrowing will Dudd use his linguistic skills to keep us Aussie.. Dudd stands for deficit and the best thing is to get rid of him whilst the red balance is still only in the billons.

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  • 14. At 06:54am on 03 Jun 2009, hubbletree wrote:

    News today is that Australia's economy has avoided a technical recession, with calculations for GDP showing Australia's GDP growing in the March quarter. The figures are based on a rise in exports, and the increased demand from China.

    It is of course, very early days. I think the political process, the decisions by the reserve bank, general public market awareness and prudence from the banking sector has all contributed to a more stable situation in comparison to most other countries.

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  • 15. At 02:58am on 07 Jun 2009, delboyroddersbro wrote:

    The notion that Australia is in the same league as Europe and the US is farcical. Australia may indeed be in the same boat as everyone else but quite simply it is not in the same league and cannot afford to dole out money to its inhabitants in the misguided hope that it will stimulate its economy. Major industry and small business stimulate economies and that doesnt mean Coles, Woolworths, David Jones and Myers, which may indeed be just the job at Christmas time. People need permanent jobs not patronisingly insignificant handouts which place the country in hock; all from a man with a vacant expression on his face, and another with an arrogant smirk on his.

    The level of debt Australia is now in is horrendous and will take many many years to pay off.

    Well done Mr Rudd, oh nearly forgot....... and Mr Swan.

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  • 16. At 04:35am on 10 Jun 2009, hubbletree wrote:

    Debt is dangerous, I agree. But it might be the lesser of all other evils. We need to look at history to determine what we should try in order to reduce the impact of similar economic contractions, and I believe most of the world's governments have done this including our own.

    The majority of the stimulus package was in the form of infrastructure spending. The effect of the cash-handouts will need to be monitored closely and precisely, so that a determination could be made on whether it should be applied in a future potential-recession (there will be more in the future - have no doubt on that).

    delboyroddersbro - I try not to make judgements on people based on their appearance. Perhaps we should assess the current government on the results of their policies.

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