Disappointment front-loaded

The Australian government is apparently moving into a September election with a budget which is unglamorous and electoral prospects fading into oblivion.  This excellent article by Ross Gittins points to a poor assessment of the Swan-Gillard era:

This is the weirdest budget you or I are ever likely to see. That doesn't make it bad - just very strange.
With just four months until the election, it's the most unlikely pre-election budget you could imagine, with loads of nasties and next to no sweeteners. It is  more like a post-election budget, particularly the kind you get after a change of government.
Usually when governments know they are going to lose, they  go for broke, offering electoral bribes they know they will never have to find a way to pay for, aiming to minimise their loss of seats.
Not this time. This budget is more likely to cost Labor votes than win it any.
No, the purpose of this budget is not vote-buying – it is reputation-rescuing, a last-ditch attempt to influence what history will say about the Rudd-Gillard government  as an economic manager (here).

While it has been a tough time globally, the article gives a sense of the extent of the budget failure:

This time last year, Swan boasted of budgeting for four surpluses in a row, as though they were in the bag. His surplus of $1.5 billion for the financial year just ending is now expected to be a deficit of $19.4 billion (but even that isn't yet certain). This year his boast of being able to get the budget back to a surplus of $6.6 billion in 2016-17 (again on the basis of Treasury's long-range projections) will draw understandable cynicism.

To this it should be added that the worst of the coming crises (property crash, domestic slowdown, slowing of foreign capital inflows and end of the China and mining booms) have not hit yet - when they do, how bad will it be?

Much, much worse.

Do you trust Wayne Swan?

Whilst there is an argument to be had about whether it even matters if Australia maintains a budget surplus (as rapidly retreating capital flows, currency and property collapse could dwarf any impacts from fiscal policy), it is probably worth considering the Treasurer's credibility as Australia soldiers on into 2013.  A couple of headlines gave food for thought on this.

....The Treasurer - facing a united push from the Coalition and the Greens in the Senate for the tax office to provide details of the budget's projected $2 billion payments this financial year for the minerals resource rent tax - has fobbed off demands to release details of revenue forecasts....Since Mr Swan's pledge last October, there have not been any monthly forecasts or outlooks published of MRRT revenue....It is clear none of the big three miners - BHP Billiton, Rio Tinto and Xstrata, which are liable for more than 90 per cent of the MRRT payments - has made any payments in the first six months of this financial year (here).

...“I’m optimistic that 2013 will be a better year for the global economy,” Swan said yesterday in his weekly economic note. “One cause of optimism is recent evidence that China’s economy appears to be stabilizing after economic conditions moderated in 2012.”....(here)