For months I've been having a nightmare: what if Australia's period of exemplary fiscal policy - which began with Paul Keating's return to budget surplus in 1987-88 - is already over and we've joined most of the other rich economies in running budget deficits every year, not just in the aftermath of major downturns?

That is, what if we've collectively lost the political will to make ourselves pay enough tax to cover the cost of all the things we require our governments to do for us?

The nightmare returned last week when Joe Hockey unveiled Treasury's projection of a further decade of budget deficits, assuming unchanged policies (including unending bracket creep).

On the other hand, it's worth remembering that even if this undisciplined scenario came to pass, the federal government's net debt would peak as a proportion of gross domestic product at 16.2 per cent in June 2019, then slowly fall as GDP grew faster than the debt grew. So the fed's triple-A credit rating would not be threatened.

With Hockey busily shifting all the blame for this daunting outlook onto Labor, it's worth examining its political antecedents. Since we've known we had a long-term ''fiscal gap'' problem at least since the first intergenerational report of 2002, the blame for making things worse must be shared not just by the former Labor government, but also by the Howard government and even the Abbott government.

The Howard government probably did most to add to the existing problem by the way it frittered away the proceeds of the first phase of the resources boom, which it treated as a permanent rather than temporary boost in tax collections.

It allowed government spending to grow very strongly - by real growth averaging 3.7 per cent a year in its last 10 years - instigated eight income-tax cuts in a row (with Kevin Rudd taking over responsibility for the last two) and greatly increased the concessional taxation of superannuation to the point where only one in five people over 60 pays income tax.

To this Labor added very strong real spending growth of 3.5 per cent a year over its last five years - including an unduly generous and ever-more expensive real increase in the age pension, now long-forgotten - and used Wayne Swan's ''fiscal bulldozer'' to push its spending commitments off beyond the forward estimates where they couldn't be seen.

Hockey's 10-year budget projections now reveal what Labor's bulldozer hid: a prospective real spending growth rate of 3.7 per cent. Specifically, on unchanged policy, spending on overseas aid, the national disability scheme and the Gonski education funding reforms positively shoots up after 2016-17 (see the remarkable graph on page 21 of the midyear review).

If anyone should have understood all this it was Hockey and Tony Abbott. But while making misleading claims about the ''budget emergency'' and promising to fix it painlessly, they added to the problem by promising to repeal the carbon tax and replace it with a more expensive solution to climate change; repeal the mining tax before it had a chance to raise significant revenue (after the accelerated depreciation allowances are used up); cut the rate of company tax by 2 percentage points and make paid parental leave absurdly more generous.

Now, Hockey will claim that since all those promises were fully funded by spending cuts and tax increases - which is true enough - his government has done nothing to add to the medium-term fiscal dysfunction it inherited.

But that makes him a Treasurer who doesn't understand opportunity cost. Had the Coalition not made all those expensive promises, it could have used its spending cuts and tax increases to reduce the fiscal imbalance it inherited.

Instead, it wasted them on vote-buying promises. And don't forget it also said ''me too'' on the disability scheme and the first four (cheap) years of Gonski.

All this on top of the underlying long-term budget problem that is no government's fault but which all governments have known about for at least a decade: the likelihood of never-ending strong growth in health spending - state as well as federal - caused not so much by ageing as by ever-more-expensive advances in health technology, to which the electorate demands immediate access.

What made the recurrence of my fiscal nightmare so scary was Hockey's fatuous statement that ''no country has ever taxed its way to prosperity'', which signalled his resolve to get the deficit down purely by cuts in government spending.

Seriously? That's a sign he still doesn't understand the nature and severity of his problem. No treasurer has ever purely cut his way to budget balance. Not an encouraging sign.