BUDGET 2013: Not tough, not clean but not bad

Amazingly, this is not a tough budget, at least for 2013-14. Despite all the talk of collapsing revenue and difficult decisions, it’s another big spender from Wayne “Shirley Bassey” Swan.

And it’s also full of revenue over-estimates, expenditure under-estimates, and fiddles and spin, which is a pity: despite all the rhetoric flying around, receipts are actually growing pretty smartly and spending is growing less than revenue.

In 2010-11 and 2012-13 the Labor government will have achieved two of only five real reductions in government spending in the past 40 years (the others were in 1988-89, 1987-88 and 1986-87, also under Labor governments).

Before Wayne Swan’s first budget the average increase in government spending since 1973 was 3.97 per cent per annum. Under Swan’s watch it’s been 3.62 per cent per annum, including 12.7 per cent in 2008.

This is not a terrible budget. At least it’s not based on blatantly over-optimistic revenue forecasts like last year’s was. But it does add $2,285 million in net new government spending from now until June 30 next year.

That is, it’s not tough: for the years that matter – this year and next – it increases spending, it doesn’t reduce it.

It only seems like a tough budget if you read the politics in the speech and the guff in the budget papers and focus on the total of the forward estimates –  which we now know should be renamed the forward wild guesses. Tickle the actual numbers in the budget papers and they’ll laughingly confess to being as soft as a baby’s bum.

In percentage terms, spending is budgeted to increase 6.5 per cent in 2013-14, or 4.3 per cent in real terms.

And despite all the talk of falling tax revenues, the budget papers actually estimate that receipts will increase by 6.2 per cent in the current financial year and 7.3 per cent in 2013-14.

Yes, at 23.5 per cent of GDP, revenue is still well below the 25.7 per cent of GDP it reached in 2005-07, but in the last couple of years and next year it’s been growing strongly. Revenue is only down compared with last year’s silly forecasts.

All budgets are sprinkled with fiddles and spin that are hidden in budget papers specially designed to hide fiddles and spin, and this one is no exception. The main fiddle, never available to corporations, is to add up the next four years and present those totals as somehow meaningful.

The key claim of the Treasurer is that this budget produces “initiatives” totaling $13 billion, offset by savings of $44 billion … over the forward estimates of four years.

This includes $11.5 billion from the increase in the Medicare levy, (fiddle alert 1 – it’s a tax increase, not a “save”), $3.4 billion from the “clean energy future” package (fiddle alert 2 – it’s household assistance that won’t be needed any more), $4.2 billion from cracking down on corporate tax avoidance (fiddle alert 3 – it won’t work), plus $10.7 billion of “other”, which could be anything.

So I count $29.8 billion of potential fiddles out of the $44 billion of “saves”.

If you just focus on 2012-13 and 2013-14, which is what this budget is about after all, the extra spending decisions announced in this budget total $2.36 billion and the extra revenue totals $75.2 million – thus, net extra spending from this budget of $2.285 billion.

I’ve added the figures for 2012-13 and 2013-14 together, but that hides another quiet fiddle: $1,136 million in local government grants have been pulled forward from 2013-14 into the current financial year. It’s a classic public service wheeze: this year’s budget is in the toilet anyway so load it up with next year’s spending wherever possible. Without it, 2013-14 spending would increase 6.8 per cent.

So what are the items of new spending that make up the $2.85 billion across 2012-13 and 2013-14?

As always there are dozens of them, but the main ones are staying in Afghanistan longer ($534.2 million), the Royal Commission into Sexual Abuse ($101.1 million), school funding ($473.3 million), more to the PBS ($178.3 million) early childhood education ($406 million), and a national partnership agreement on homelessness ($155 million).

In addition there are a few things that weren’t decisions – just expenses that got out of control: asylum seeker management costs ($1.3 billion), medical benefits schedule payments ($454 million), private health insurance ($474 million), R&D claims ($135 million more than expected), disaster relief ($219 million more than expected).

But of course those are dwarfed by the revenue mistakes: $12.9 billion for 2012-13, $16.6 billion for 2013-14 and $61 billion over the “forward wild guesses”.

And for that the Treasurer and his department head look like being sacked, with cause.