Surplus

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Labor advocates may wriggle all they like but Wayne Swan deserves to weather some criticism for the budget deficit. Not because he is responsible for it but in his eight years as Labor Treasury spokeperson he has persistently escalated the political importance of a surplus. As shadow treasurer he insisted that Labor would do it, in 2008 when he delivered his first budget he gloated that Labor had done it and  in the wake of the Global Financial Crisis he has maintained has Labor will do it again. Wayne Swan has his whole career tried to make political hay from the notion that a surplus is invaluable and for him to turn around at the eleventh hour and suggest otherwise is unconvincing. We all know that if revenues had been better and Swan had managed to produce a surplus that he would have milked it for all the political capital in the world, and that’s why he deserves a bit of criticism.  

In some ways Labor’s surplus commitment is a bit like John Howard’s interest rate pledge in 2004. In both cases a senior politician promised something popular but that could only be achieved by the government acting contrary to Australia’s economic interests. When it came to the crunch neither had the stomach to actually fire a torpedo into the Australian economy so broke the promise and weathered a lot of criticism. Although in Swan’s case, it wasn’t entirely out of his hands.

In 2010 after Julia Gillard usurped Kevin Rudd as Prime Minister the government acted swiftly to provide some vindication for the decision. One of the ways to do this was to organise a truce between the government and the major mining companies who were on poor terms with Rudd. In order to do so Labor  shelved Rudd’s Resources Super Profits Tax and in the process gave up billions of dollars in potential revenues.  A modest estimate is that the government will be four billion dollars shorter in revenues for this financial year because of the abandonment of the RSPT in favour of a Minerals Rent Resource Tax. So whilst the 2012 decision to abandon the pursuit of surplus might have been placing policy before politics, it was Labor’s pursuit of short term political capital in 2010 which landed them in this situation to begin with and I say that’s not something they should be allowed to brush aside.

On a little aside this will be the last piece I write for the year and probably for some time in 2013 as well. In the course of my new job I am required to do a considerable amount of writing so these erratic writing skills will get plenty of honing without the use of semi regular wordpress updates. I have enjoyed writing each and every one of these blogs and to everyone who read them and commented I am both grateful and apologetic. As we role into 2013 I find myself in a considerably more optimistic and content state of mind than at virtually any other point in my life and for those who have in some way contributed to this I say thank you. 

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