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Now featuring the Hockey Horror Show

Come off it. You think the federal budget was brutal? Wait till you see what's coming.

The other shoe to drop will be the government's tax white paper next year where you can be sure super and the GST will get a good workout.

Besides, just as former treasurer Wayne Swan shunted extra spending back to the never-never, Joe Hockey time-shifts the cuts. No point slashing spending straight away and mugging the economy just as it's on the mend.

Most of the budget's biggest nasties – the $7 co-payment for seeing a GP, the six months on P-plates before somebody under 30 can go on the dole, and family tax benefit cuts – don't start till halfway through 2015. For the full Hockey Horror Show you'll have to do the time warp to 2017, which is after the next election.

Don't get me wrong – the budget hurts families, students, the sick and the young unemployed. It might spread the pain, but some are going to feel it more than others. Did you notice the pay freeze for MPs lasts only one year, the deficit levy on high-income earners three years, and the cuts to welfare forever?

And let's not forget fiscal drag/bracket creep will be alive and well – income tax collections will climb 9.2 per cent in the coming financial year and 8.3 per cent in the next. Yet in both years, employment will rise only 1.5 per cent and wages 3 per cent. The rest is you paying more tax.


The government might be hacking into welfare but it'll be spending most of the savings on its own version – $50,000 for half a year's parental leave, anyone? – and infrastructure. Even the new taxes will be spent.

There's a modest 1.7 per cent real decline in spending in 2014-15, far less than one of Swan's better efforts of a 3.2 per cent cut in 2012-13.

The trouble is down the track real growth in spending will average 2.6 per cent a year, which is justified as being lower than the 5.9 per cent in 2017-18 Treasury says Labor planned.

Hmm, 2.6 per cent real growth isn't exactly austerity either. It's even above the 2 per cent sought by Swan. Saying we might be bad but the other mob would have been worse is no excuse.

Funnily enough, the budget deficit for the coming financial year of $30 billion is $6 billion higher than Labor's last stab at forecasting just before the election, though I wouldn't read too much into that.

Still, the budget deficit is shrinking and government debt is growing more slowly. The promised land of a budget surplus won't be seen until 2019-20, which economists say is credible because the forecast economic growth hasn't been conveniently inflated. On the contrary, there's some wriggle room considering the budget conservatively assumes growth of only 2.5 per cent in the coming financial year.

Then again they don't seem too worried that from 2016-17 growth jumps to 3.5 per cent a year or what Treasury calls "above trend", which by definition is higher than the norm.

Mind you, the economy is already growing at almost 3 per cent. And that's despite the dollar being too high.

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