Labor's flawed Budget will prove disastrous

Prime Minister Kevin Rudd famously promised ``all good things do come to an end'', as we are being reminded in the ABC's advertisement for its Tuesday night Budget coverage.

The reality is that there has never been a good thing under the Rudd government. The good things came to an end when the Howard government was voted out of office. Over the past week, Labor's spin doctors have been busily attempting to soften up the electorate with a barrage of leaks designed to lower the public's expectations of a soft Budget. The leaked projection of the deficit _ in the $50 to $60 billion range _ is a case in point. Treasurer Wayne Swan may, in fact, announce a slightly lower deficit and, psychologically, many people, and particularly those who cannot or do not wish to see through the sleight-of-hand, will think, ``Hmmm, that's not so bad.'' The question is: compared to what? The surplus that existed when the Howard-Costello team left office? A number of economists are cynically running books on the number of times the terms ``decisive'', ``global fiscal crisis'', ``temporary deficit'' and ``temporary deficit over a longer period of time'' will appear in Swan's Budget speech. Given the propensity of this government to parrot such phrases, the odds are pretty short _ but it's a harmless exercise. It's a pity the Budget will not be as painless. Swan and Rudd have both embraced contradictory notions about the current economic situation, insisting that while this is the worst recession since the Great Depression, there will be a rapid recovery. How exactly does that work? Just as contradictory are the claims by Rudd and Swan of the success of their fiscal stimulus package _ the great cash handout _ and the need, now, for a tight Budget. This is clearly fundamentally inconsistent. If stimulation was necessary last week, why is it unnecessary this week? Or is Labor, in changing tack, admitting that it has effectively exhausted the borrowing capacity of the Australian government? Then there is the pressure on the nation's current AAA credit rating. With Rudd guaranteeing banks, depositors and proposing to guarantee State Government debt, plus the liabilities of Ruddbank and the National Broadband Network, plus the actual debt of perhaps $300 billion, the capricious credit-rating agencies may well decide that the risk has escalated and downgrade Australia to AA+, which will affect the cost of all the guarantees, which in turn will no longer be AAA. Astute readers will also be aware that Swan has already announced that there will be changes to the way Budget forecasts are calculated, which will render comparisons with past years difficult and shorten the period of the forecast and make it easier for the Rudd government to dodge responsibility for the current disaster. No matter what dodges the Government pulls, however, it cannot escape the basic truth that it is the Government which controls what is spent and what comes in as revenue. If it claims it has lost control of expenditure and revenue, if it attempts to portray the Budget process as something that is beyond its control, it clearly has abrogated its responsibility to govern. Rudd and Swan have never taken any tough decisions. Nor have they been forthcoming about their big plans for the nation whether it be their totally flawed and implausibly based solution to the fallacious global warming hysteria or a return to Budget surplus. Their policies are announced on an ad-hoc basis to distract from unpleasant news and there is no detail on their implementation. Where's the nitty-gritty of the plan to get public finances back on track after two failed stimulus efforts? The Rudd government has done more damage to the Australian economy in less time than it took the Whitlam government to become a global joke. If it wants to claw back any semblance of credibility it needs to start providing specifics of cuts and expenditures, the programs to be axed and those to be funded, which taxes will be reduced and which will be raised, and by how much. The Rudd government's record on economic logic, let alone transparency, is abysmal. Last year, in the middle of its ``war on inflation'', it actually increased spending in its first Budget. If the Rudd government was incapable of reducing spending when the political and economic circumstances were most favourable, how will it manage to do so in an election year? If last year's Budget is any guide, this year's Budget will be a disaster. Remember the surprise taxes on alcopops and condensates, to name but two, and recall what a waste of time and energy they have been? In fact, as Peter Costello said, the Rudd government's first Budget should be filed away in the parliamentary library under ``F'' for fiction. Unless it comes clean with the public on Tuesday, there ought to be a companion volume up there soon.