An awkward truth: Why the 2019 budget isn’t really ‘back in black’ yet

It's a forecast surplus in 2019-20 of $7.1 billion but this year, the budget is still in deficit.

It's a forecast surplus in 2019-20 of $7.1 billion but this year, the budget is still in deficit. Photo: Instagram

The ABC’s Leigh Sales began her interview with Treasurer Josh Frydenberg on budget night by offering a simple truth.

“You told the Parliament the budget is back in the black. It is still in the red,” she said.

The Treasurer responded with an answer that the late, great John Clarke of Clarke and Dawe fame would have included in one of his political sketches.

“It is a surplus,” Mr Frydenberg insisted. 

Except, it isn’t. It’s a forecast surplus for 2019-20 of $7.1 billion. This year, the budget is still in deficit. 

“We are in 2018-19. It is a deficit this year of $4.2 billion,” Sales observed. 

No, the Treasurer insisted, it is a “credible trajectory” over the next four years.

But surely, Mr Frydenberg was pressed, it might not happen?

“No, it will happen,” he promised.

The man who will be treasurer after the election, if you believe the polls, declared the budget an “underwhelming document”.

“In fact, this is a budget by a government which has given up governing,” Labor’s Chris Bowen said.

It’s a line the Labor Party recycles multiple times a day. 

“As for the surplus … I mean nearly a quarter of it comes from spending less on people. The rest comes from highly heroic wages assumptions and disabled people – which this budget again downgrades as every other Liberal budget has done,” Mr Bowen said.

“It jumps up then like a magic beanstalk … to return to higher levels to underpin a surplus and the rest comes from a higher tax revenues and high commodity prices, which are nothing to do with Canberra or the federal government.

“The government has forecast a return to surplus. It hasn’t delivered one, but it’s forecast one and the forecast is subject to some questions, particularly around wages.” 

Based on the figures, Mr Bowen insisted Labor would deliver a better budget bottom line than the government, a promise that remains just that. There are no guarantees.

Of course, Labor’s policy decisions also involve tax increases under negative gearing reforms and other measures.

Expect to hear more of that all the way to election day. 

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