Terry McCrann: It’s a fightback, but not in the John Hewson mould

SCOTT Morrison and Josh Frydenberg have a Budget with money to spend and they should start spending it in the mid-year Budget update in December, writes Terry McCrann.

SCOTT Morrison and Josh Frydenberg’s fightback started on Tuesday.

They finally have a Budget with money to spend and they can — they should — start spending it in the mid-year Budget update in December.

Indeed, they can — they MUST — turn the update into something between a mini-Budget and a full-on normal Budget. For all sorts of reasons they can’t “wait” until the normal Budget time in May.

BUDGET 2018: VICTORIA’S BIG MONEY ON A DRIP-FEED

BUDGET INFRASTRUCTURE SPEND VICTORIA HAD TO HAVE

‘DRAMATIC IMPROVEMENT IN REVENUE’ COULD BRING EARLY SURPLUS

Either way, mini or full-on, it should kick off the election campaign; and kick it off very differently to the ill-fated and just awful 2016 Budget of former PM Malcolm Turnbull and his then-treasurer, the said same Morrison.

Actually, talking of ill-fated and awful, some with long memories might suggest I should have used a different word in the opening paragraph.

Prime Minister Scott Morrison and Treasurer Josh Frydenberg. Picture: AAP

We’ve had a Coalition Fightback! once before; all it succeeded in doing was delivering then-Labor PM Paul Keating the (self-described) “sweetest victory of all” in the “unwinnable” 1993 election.

It was also one of the most undeserved — but then, as it did save us from the disaster of a PM John Hewson and gave us instead 11 years of John Howard and Peter Costello after the 1996 election, maybe we should actually be grateful to Keating for succeeding in “doing Hewson slowly”.

I’ve used the word in 2018 as a descriptor of how the government can build political and policy momentum, not as the title, with the unfortunate emphasis, of Hewson’s political manifesto.

I must also hasten to add I am most certainly NOT endorsing the government — or for that matter, the Opposition — embarking on a spending spree.

That, just as we finally get the Budget back into surplus after a dozen years of deficits, we immediately move to plunge it straight back into deficit. And that we might then be doing that just as the (local or global or both) economy slows and thus those deficits explode.

Then Liberal Opposition leader Dr John Hewson campaigning in 1993.

I am describing a better fiscal outlook that has finally become available to give the government some sort of opportunity to seize the positive political and policy agenda and so have some sort of a chance in the coming election.

What was reported on Tuesday was history — the Budget outcome for the 2017-18 year to the end of June.

The deficit came in at $10.1 billion. That was almost half the $18 billion deficit that had been estimated in the Budget just in May, when the numbers from 10 months of the year had already been counted.

It also, importantly, compared with a deficit of $29 billion, estimated a full year ahead year in the May 2017 Budget.

It could have been cut below $10 billion if the former PM hadn’t opted to make that surprise $443 million Barrier Reef grant in the last week of June.

This lower historical deficit, critically, locks in a lower (estimated) deficit for the current year which has just started. A year ago it was projected to be a still-thumping $21 billion; in May this was cut to $14 billion. In the mid-year update in December it will come out as a small surplus.

That’s to say, a surplus before the government makes some new policy decisions — either to cut taxes or to increase spending.

It’s got to get those decisions right. They need to be limited and very finely targeted; they need to be cleverly back-end loaded so they become more expensive in the “out years” when bigger surpluses will be projected.

The big opportunity comes from the way the underlying economic numbers, which determine how much tax flows into the coffers and how much spending takes place, will be playing out.

The Budget bottom line was so much better than expected even just in May, because the economy was much stronger in the closing three months of the year than Treasury expected.

More people in jobs paying taxes and people still spending despite (or, because of?) sluggish wages growth.

The Budget forecasts will get a double boost. The first is because of the higher base; the second will be actual strength in the economy in this half year.

They will combine to deliver a “wonderful set of fiscal numbers” in December.

The 2019 and even more the 2020 reality could be very different. The economic strength is probably not sustainable; we will be back to Treasury over-estimating the “good” numbers.

But the “good” forecasts could get the government over the line. They could also leave an incoming Labor government with a big fiscal headache.

FAIRFAX & ABC HYPOCRISY

SO, for the massed ranks of the Fairfax lefties and the ABC luvvies, while it would have been utterly outrageous for Rupert Murdoch to tell his commentators to attack former-PM Malcolm Turnbull, it would have been just fine for him — on Turnbull’s request — to instruct them NOT to attack the former PM.

Since Turnbull committed hari-kari, there have been endless reports in Fairfax papers and on the ABC of Turnbull ringing Murdoch to demand he stop the attacks — all reported without the slightest criticism of the former PM seeking to use the proprietor to tell his journalists what to write.

As usual with Fairfax and the ABC, it’s a line ball between which is more laughable and as always entirely predictable — the yawning hypocrisy, the utter lack of any self-awareness, and the most basic stupidity.