Capt’ Glenn annihilates Bozo’s Budget outlook

I noted Wednesday that Capt’ Glenn’s embrace of notions of secular stagnation had punched a huge hole in Bozo Joe’s Budget outlook and today David Uren sticks his head through it to find a gaping maw:

Reserve Bank governor Glenn Stevens’ warning on Wednesday that Australia’s potential growth rate may have fallen permanently would have profound implications for personal income tax and company tax revenues.

…PBO modelling shows what would happen to the budget if productivity and economic growth slowed by 0.5 percentage points. Budget deficits would be $10.3bn bigger by 2019-20 and $33.1bn bigger by 2024-25. Across the decade, deficits would be $142bn bigger.

But the PBO modelling does not take account of the jump in growth in Treasury’s projections from 2017-18. That jump was ­designed to add another 2.5 per cent to growth over a five-year ­period in order to bring down ­unemployment. If that jump does not happen, and growth flatlines at the current rate of about 2.5 per cent, the budget bottom line would be at least $40bn worse than Treasury estimates by 2024-25 and $170bn worse over the decade. Instead of moving into surplus from 2019-20, the budget would remain in deficit that would get sharply worse.

Bozo’s terms of trade and business investment outlooks are also laughable so basically we continue to carry a fictional Budget to support his political ambitions and damn the nation.