“The economy, stupid” was the phrase coined for Bill Clinton’s successful presidential campaign of 1992. If the latest Mid-Year Economic and Fiscal Outlook (MYEFO) is anything to go by we’re skating on thin ice.
The deficit is now $10.3 billion higher than forecast. The growth forecast has also been downgraded from 2.5% in the May budget to 2%.
The $1.1 billion surplus is based on a projection which is simply a best guess of what might happen. It includes the “zombie measures” worth $13 billion, which the government has no hope of getting through the Senate as well as, for the first time, the Future Fund profit.
Talk about sleight of hand.
Expenditure has outstripped revenue by some $35 billion. While it will fall to 25.2% of GDP, it rose to 26.3% of GDP under the Coalition. That is, the government, despite its blame game, is largely paying off its own accumulated debt.
The budget deficit will continue to blow out until $94.9 billion of cumulative deficits are produced over the forward estimates. Net debt will rise to 19% of GDP as it tops $363 billion. Interest paid on this will be more than a $1 billion a month.
This from a government that prides itself on financial management.