THE DISTILLERY: Budget buffoonery

Jotters look forward to a federal budget lock-up they say will give little hint on real government incomes and spending in the coming year.

Tonight Treasurer Wayne Swan will deliver his sixth and last budget speech. Journalists from around the country have converged on Canberra for a lock-up with the budget documents. It’s kind of like a slumber party, but it differs from the kind that six-year-olds are known for because attendees will likely be struggling to stay awake within seconds of commencing.

The Australian Financial Review’s Chanticleer columnist, Tony Boyd, points out that the consistently poor coverage of Labor’s economic record ignores the fact that Swan was named the world’s greatest treasurer by Euromoney magazine. Additionally, he’s presided over a AAA-rating for six years, longer than any before him.

“Former Prime Minister John Howard basked in the glow of a AAA rating during his five years as treasurer in Malcolm Fraser’s government from 1977 to 1983. When Peter Costello became treasurer in 1996 the credit rating was AA . His conservatism and good fortune on the revenue front helped triggered successive upgrades by Standard & Poor’s to AA with a stable outlook in May 1999 and then AAA with stable outlook in February 2003. Former treasurer Paul Keating had three years of AAA rated status before a crisis in the terms of trade and his discussion of a ‘Banana Republic’ triggered a downgrade in December 1986.”

The Distillery would like to emphasise that in terms of the world’s financial authorities, Euromoney could be considered a pissant. It has a circulation of 25,000, The Economist has almost 1.7 million. And the rag is named in reference to a continent renowned for its fiscal incompetence. Why are we supposed to care about who they believe is the world’s greatest treasurer?

World’s greatest or not, we can forgive the numbers in this budget turning out to be wrong, they always are. The Australian’s economics editor, David Uren, reports that economists are warning the government’s revenue expectations are likely to be excessive, again. The Herald Sun’s Terry McCrann is similarly certain of the notion that the numbers will be different.

“Further, it will be different by a significant, obvious amount. I'm not talking petty differences. And all this goes pretty much for every number in the budget. The number for spending, the number for tax – the overall one for tax, and the ones for all the individual taxes. For growth in the economy. Inflation. Jobs. All of them. They will be, significantly, different in outcome from the prediction.”

The Australian’s economics correspondent Adam Creighton says Swan might be compelled to rank the Australian dollar lower on the list of excuses for the budget deficit.

“Currency strategists are tipping the local currency will slump as low as US93c against the greenback, which will boost whatever revenue Treasury's recently humbled forecasting division has budgeted. The Treasurer has routinely blamed the "stubbornly high" Australian dollar for the series of revenue writedowns that have turned his projected $1 billion surplus this financial year into what could be a series of sizeable deficits. The dollar dipped below parity against the US dollar on Friday for the first time since June, dragged down by the Reserve Bank's controversial rate cut last week, better news on the US jobs market and speculation China was realigning its $3 trillion foreign exchange portfolio. On a trade-weighted basis, the local currency has fallen almost 5 per cent since its April peak.”

And The Australian Financial Review’s Jennifer Hewett gives her impression of what the budget lock-up will be like with Labor doing such a good job of making the document look like a terrific joke.

“Thus we all troop off to the budget lock-up in Parliament House Tuesday for hours of earnest study of lengthy documents with little or no credibility. The costings are of policies that will not be implemented by this government and probably not the next. The forecasts only have to be compared with last year’s to be quickly put in the bin. Within the next few months, the mandated financial outlook that must be released 10 days into the official campaign will come up with a whole new set of numbers to explain away. And that’s when the public still doesn’t understand how much the decline, in the terms of trade and in resources investment, will act as a drag on the economy rather than a boost over the next few years.”

Sleep tight business scribes.

Elsewhere, Fairfax’s Elizabeth Knight believes that billionaire James Packer has the upper hand in the battle for the future of Sydney’s casino market, or more precisely, the next stage of the harbour city’s casino development.

In other company news, Fairfax’s Adele Ferguson argues that Stockland’s share price jump yesterday was “more a relief rally” than a knife wasn’t taken to the dividends.

The Australian’s Barry Fitzgerald notes that, once upon a time, a solid portfolio was “built around tramways, tobacco and tin”. Tramways are gone, tobacco has a serious funk around it, but tin is staying strong.

And finally, The Australian Financial Review’s Matthew Stevens writes that Glencore Xstrata’s withdrawal from its $1 billion Balaclava port project is chief Ivan Glasenberg’s “distrust of greenfields economics” – that, and the deterioration of Australian coal’s attractiveness.

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