David Uren has a nice piece today at The Australian describing the MYEFO process:
NEXT Tuesday’s budget update will be a shocker…There is a danger that the new government’s first major economic statement will extinguish what was an incipient economic recovery.
…Hockey’s defence is that he has no alternative but to tell the truth about the state of the budget and the economy; it is his solemn duty. Leaving the release of the update until as late as possible in the year is the best he could do to soften the impact. However, there is noise around Canberra that the call has gone out to departments to get every last bit of unfinished business on to the budget books.
Programs that have been funded for only a few years but that are expected to be ongoing will have their full cost booked. The objective is to make the budget look as bad as possible. The decision to give the Reserve Bank an immediate $8.8bn in additional capital, rather than phasing it in across several years as the Reserve Bank had anticipated, has this effect.
There is political theatre in all this. Next May the government will hand down a budget incorporating politically unpopular savings recommended by the Commission of Audit. Creating a sense of crisis about the budget makes it easier for Hockey to sell the needed savings to his ministerial colleagues and to the public at large. Hockey also sees the budget update as an opportunity to attack his Labor opponents…
Hockey should not allow the temptation to attack political opponents to generate unnecessary alarmism about the outlook. It could be self-fulfilling.
