Scott Morrison's description of the path back to budget balance as being like a family motoring holiday – with incessant cries from the back seat of "are we there yet?" – was an odd one to use in the circumstances. The mid-year economic and fiscal outlook released by the federal Treasurer on Tuesday was as discouraging as voters had been led to believe, so reminders of the need for patience (and the improbability of an easy shortcut to a surplus) were clearly justified. But a simile comparing a budget deficit to a journey seemingly without end was injudicious, and a figure of speech Mr Morrison's political opponents are likely to parrot back at him with glee.
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The Coalition was incessant in describing Labor's fiscal management record under then treasurer Wayne Swan as a debt and deficit disaster. The figures "achieved" under Labor, however, pale by comparison with the Coalition's: the deficit for 2016-17 is forecast to be $37.4 billion versus $35.1 billion at the time of the May budget, and the date at which a return to surplus is expected has been pushed back to 2020-21. Net debt is expected to reach $278.8 billion in 2015-16 (equivalent to 16.9 per cent of GDP) and to reach $647 billion by 2025-26, up from the May forecast of $573 billion. If these trajectories prove over-optimistic (and Treasury's forecasting has proved notoriously unreliable in the past), Australia's AA-credit rating could be at risk.
Like Labor before it, the Coalition has had to contend with continuing revenue write-downs caused by falling commodity prices, low wages growth and volatile equity markets. But under Tony Abbott, efforts to rein in spending to match revenue shortfall proved singularly unsuccessful, either because of voter backlash or because the Senate refused to support contentious education and welfare cuts. Imprudent spending initiatives bequeathed the Coalition by Labor did not help matters. But even allowing for the Senate's recalcitrance, Mr Abbott's transition from budget zealot to budget sloth was remarkable, especially given the vehemence with which he attacked Labor for its fiscal inaction and recklessness.
Thus far at least, Malcolm Turnbull has shown a similar disinclination to embrace the really tough decision-making that's required to fix the budget. Recent spending initiatives, including the innovation statement, have added a further $2.7 billion to the long-term deficit. Far from making a dent in the deficit, the savings identified in Tuesday's MYEFO will offset only those most recent spending decisions. And for all the talk of long-term structural budget deficits, the government continues to send signals indicating it wants any new tax measures to be revenue-neutral.
Insofar as Mr Turnbull has yet to win a public mandate, his fiscal caution is warranted. Indeed, it's been suggested that the more terrifying the deficit and debt numbers appear, the more likely it is that voters will get behind measures to rein them in. However, voter support will be assured only if spending and revenue proposals are demonstrated to be sound and equitable. In that regard, the government has yet to face its first real test.
