Via a demoralised Ross Gittins:
The mid-year budget update we’ll see next Monday presents the government and its econocrats with a threshold question: can their battered credibility withstand one more set of economic forecasts based on little more than naive optimism?
Or won’t it matter if first the industry experts, and then the Quiet Australians in voterland, get the message that budgets are largely works of fiction – based on political spin, with forecasts crafted to fit – and so are not to be believed?
…Three quarters into our run of five weak quarters, Scott Morrison fought the election on a claim to had delivered a Strong Economy. The two subsequent sets of national accounts have destroyed that masterpiece of the marketer’s art.
…But Morrison’s misrepresentations came bolstered by Treasury forecasts and projections showing the economy would quickly recover from weakness to strength, whereupon it would enter a five-year period of above-trend (3 per cent) annual growth before reverting to trend for the rest of a decade.
…See the problem Treasurer Josh Frydenberg and his troops face in preparing next Monday’s mid-year budget update? Do they keep playing the budgetary version of the with-one-bound-our-hero-broke-free game and leave themselves open to growing derision, or do they stop pretending, offer plausible forecasts and adopt a more defensible projection methodology, and start on the long road back to being respected and authoritative?
They will lie of course.
Eventually they may be held to account by the ballot box but maybe not. Labor is pretty hopeless. The media is compliant. Murdoch is 100% behind the Government and Nine is lobotimsed by Domain.
Only MB will hold their feet to the fire.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.