Wednesday, 20 June 2018

Budget buffer?

The Treasurer is winning the post budget arguments because those who question his mastery aren’t acquainting themselves with the true situation.

The Treasurer is setting the agenda. We have fixed the budget mess he claims. There are surpluses as far as the eye can see.  Are there surpluses? Yes. Does this mean the budget is fixed? No.

The corporate world is littered with the corpses of companies which showed profits one day and went belly up shortly thereafter. Profits or net operating surpluses in this case, often coexist with cash deficits. Yet most people, innocently accept the Treasurer’s claim about future surpluses thinking he means cash surpluses, and respond by saying why not spend them now?  The Treasurer’s answer is essentially to say, no, they are needed to provide a buffer for the future.

This is the point where the Treasurer crosses the line from an arguable position, namely the existence of surpluses, to a baseless assertion that he is creating a future buffer.