A key element of Prime Minister John Howard’s claim to good economic management has been his commitment to deliver budget surpluses equivalent to at least 1% of Australia’s GDP.
Now, it appears, that promise is an aspirational one. According to reports, in 2010 the Coalition’s promises would mean spending of $3.8 billion – breaching the $3 billion limit if the projected budget surplus for that year is to stay at 1% of GDP.
Howard’s response to this small problem is revealed in a newspaper interview he gave last night in which he points out that, on the past three years, the actual surplus the government has ended up with has turned out to be higher than the budget forecasts.
This raises two questions. If it is so certain that the budget surplus is going to end up higher than expected, why wasn’t that taken into account in the official treasury forecasts? And if Howard always meant 1% of a possible budget surplus, not the actual forecast, when didn’t he say so before now?
Of course, Labor spending commitments, although less than the Coalition’s, haven’t exactly matched Rudd’s constant promises of economic conservatism either.
Today’s ALP campaign launch in Brisbane will be the sternest challenge to Rudd’s claims yet. $500 million is already on the table for renewable energy R&D – that will have to be one of the bigger promises he makes today if he is to avoid being accused of risking higher inflation in his quest to win government.
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