THE DISTILLERY: Hey, big spender

The Australian Financial Review's Jennifer Hewett explains how the government's budget fiddling has poorly hidden the structural deficit that is now embedded for years to come.

"That leaves Labor desperate to explain not only why this year’s deficit will be large but why the outlook for next year and beyond is so lousy. This when the government is also promising big new 'spends' in areas like education and the national disability insurance scheme as part of the long march to the election campaign. These 'priorities' are being sold as unassailable Labor values (in case the public was wondering what those values meant any more). So that’s why it’s so important to now blame an unexpected collapse in revenue rather than attaching any blame to the impact of several years of discretionary decisions whose long-term cost is now becoming evident."

The Australian's Judith Sloan equates the increasing fiscal difficulties facing Swan with that of Clark Griswold in National Lampoon's Christmas Vacation. Having committed to spending on the family holiday, Chevy Chase's character discovers that he isn't receiving his Christmas bonus and is left with quite a challenge.

"Let's face it, this government has no idea how to conduct budgetary policy or manage public finances. We were told for years that it was the right thing to have the budget return to surplus in 2012-13 and that failure was not an option. We are now told that being in deficit is no big deal. Not only will there be a budget deficit this year, there will be a series of deficits over the forward estimates. So the projected budget surplus of $2.2 billion in 2013-14 – forget it. The projected budget surplus of $3.3 billion in 2014-15 – forget it. And the projected budget surplus of $6.4 billion in 2015-16 – you guessed it, forget it. And note that these projected budget surpluses were always implausibly wafer-thin."

It should be added that Swan had a political interest in assuming the best and is destined for a terrific post-parliamentary career regardless of how badly Labor is defeated. Chase had a much harder time getting a decent gig post-Griswold.

Meanwhile, Fairfax's Tim Colebatch is similarly worried about the state of Australia's finances on the back of a report by Grattan Institute chief executive John Daley. But he is further concerned by recent comments from renowned economist Ross Garnaut – in regards to our ageing society, as well as our falling federal revenue and big spending pledges – that have been all too quickly forgotten.

"The doctors and hospitals are doing a wonderful job of increasing our life expectancy. That is blowing out spending on health and aged care, but I suspect that is Australians' top priority, and governments just have to find new ways to pay for it. The Howard government not only gave seniors a lower tax scale than working Australians, but allowed us to take our superannuation tax-free on retirement. The bottom line is that something's got to give. Australia cannot continue this level of spending with this level of revenue. Excluding East Asia, our government spending is already the second-lowest in the Western world, behind only Switzerland. Both tax rises and spending cuts will be needed to get our budgets back in balance."

In company news, Business Spectator's Stephen Bartholomeusz explains how Qantas Airways' funding deal with the New South Wales government underlines the ongoing bitterness between chief executive Alan Joyce and his predecessor Geoff Dixon, who now chairs Qantas' former partner Tourism Australia.

Fairfax's Elizabeth Knight reports on the intriguing subplot to Echo Entertainment's rival Sydney casino proposal, with major Singaporean billionaire shareholder KT Lim arriving in the harbour city on Friday.

The Australian's Richard Gluyas looks at the impact of Japan's money printing on ANZ Bank's wholesale banking margins.

In other news, Fairfax's Adele Ferguson gives her readers the rundown on a Deutsche Bank survey indicating that Australia is now amongst the most expensive places in the world to live.

The Australian's John Durie explains how hopes that the definition of "unconscionable" conduct in the context of Australian corporate law has been made a little clearer by yesterday's court decision over Excite Mobile.

And finally, The Australian Financial Review's Chanticleer columnist Tony Boyd has an exclusive revelation from the Australian Taxation Office about what could be an end to a practice known as 'dividend washing'.