Illustration: Rocco Fazzari.
PUT the hair shirt back in the wardrobe, you won't be needing it.
A budget surplus will be nowhere as scary as business groups and many economists are saying.
Not only has the deficit been shrinking, if from a high base, but the auction of the analog TV spectrum for 4G mobile-phone frequencies will give Canberra some spare billions for the cabinet, um, I mean cupboard.
And if the US spectrum auction two years ago is any guide, this could be anything up to $20 billion.
That's why I wouldn't be too fussed by this talk about the government being on some bizarre budget fetish in wanting to turn a big deficit to a slight surplus, which can only end in tragedy. Or worse, a recession.
More likely it'll be the fillip the sharemarket needs because then the Reserve Bank can get serious about cutting interest rates and taking some of the froth off what it hints is an overvalued dollar.
Far better for sustainable economic growth is having lower interest rates than elevated government spending.
Besides, bearing in mind how much the economy depends on the international money market to finance investment, a budget surplus leaves more elbow room to borrow locally because the government won't be doing so.
Nor is hauling in the $37 billion deficit to a $1.5 billion surplus, the biggest fiscal crunch since who knows when, as sudden as it seems.
Truth is, this squeeze has been going on for a while. By February the deficit, which the same time last year was nudging $60 billion, was $29 billion - with another 14 months until the target date.
At that rate of improvement the government shouldn't have too much trouble, provided it gets past next month's budget without lifting spending. Granted, that's a big ask.
Perhaps you've noticed Wayne Swan never mentions the fiscal contraction is clipping growth.
It's just as well he doesn't because imagine the howls of protest, considering that not even business groups, the natural constituency for a budget surplus, are on side.
The latest forecasts by the Reserve Bank and the International Monetary Fund are lower than the government's budget update at its last economic outing back in November.
Even so, it only has to find a few more billion to cut - oh dear that sounds familiar doesn't it? - to make up for the slightly lower economic growth.
That'll be easy - it can bring forward some spending in 2012-13 and stick it in this financial year.
But far be it from me to teach it how to suck eggs, especially when it's been pretending for ages that the mining tax will raise $10 billion over three years.
From a tax on mining profits designed by the mining companies? I don't think so.
What the deficit defenders also overlook is the fiscal boost from the multibillion-dollar infrastructure spending by the NBN which, because it was set up as a separate enterprise, doesn't count as government spending and so conveniently isn't in the budget.
Anyway, even a surplus that's fuzzy around the edges will allow, indeed compel, the Reserve Bank to cut rates. Just ask Julia.
That'll boost economic growth, starting a virtuous circle that also helps the surplus. Trust me, it'll all be worth it. Lower rates will restore the confidence sapped by job losses.
After all, retailers and builders are the biggest employers.
And watch the sharemarket catch up to Wall Street as the Reserve gets into the swing of cutting rates, which will also pare back the dollar.
Better hope property prices behave, though. If there's any whiff of a bubble forming, all bets are off.