At the heart of every federal budget are a series of assumptions made by the federal Treasury on everything from population growth to consumer spending, all of which are combined in an attempt to form a credible view of what the future of the economy and the budget bottom line could look like in the months and years ahead.
The problem is that, in recent years, the Treasury has got some of its most important forecasts horribly wrong, with extremely serious consequences, and a lack of understanding of the psychology of the Australian people has seen the cost of some policies rise by over 600% relative to the Treasury’s forecast.
If this were simply a case of getting a series of high-level estimates wrong, that would be entirely understandable; after all, we are talking about highly complex forecasting with an extremely large number of variables.
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