No, Australia is not ‘back in the black’: Truth behind the government’s $7.1b Budget

Last night, the Morrison Government triumphantly declared the Budget is “back in the black”. There’s just one glaring problem.

“Tonight, I announce that the Budget is back in the black and Australia is back on track.”

This was the opening line of Treasurer Josh Frydenberg’s Federal Budget speech last night in which he declared Australia was returning to surplus.

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The Treasurer was keen to emphasise the Budget had been brought back into a surplus for the first time in 12 years without increasing taxes.

The thing is, it’s not technically true. The current financial year is projected to end with a $4.2 billion deficit — in part due to a pre-election cash splash. Everything else is forecasting.

7.30 host Leigh Sales was the first to raise this point with Mr Frydenberg in her interview with the Treasurer immediately after his Budget delivery.

In her opening shot, she said: “You just told the parliament the Budget is back in the black, but it’s actually still in the red.”

“It’s actually a $7.1 billion surplus for 2019-20 with $45 billion in surpluses over the next four years,” replied Mr Frydenberg.

“Treasurer we’re in 2018-19,” Sales pointed out. “It’s a deficit of $4.2 billion.”

Mr Frydenberg said the Coalition “inherited a Budget that was out of control”. “Spending was growing at around 4 per cent per annum. We have reduced that to half now. We are now seeing the product of that disciplined decision-making with a Budget surplus of $7.1b and surpluses in the years ahead.”

“Just for the sake of accuracy, can we agree that we are in the 2018-19 calendar year, and that this year there is still a deficit?” said Sales.

“Well what budgets do is that they set out the numbers and trajectory for that year and the years ahead, and we set out in the 2019-20 Budget the numbers for 2019 and 2020.”

“But we also, as part of the Budget, get into what happened this year,” said Sales. “And this year, Australia is still in the deficit.”

While that’s not to suggest the surpluses laid out by the Coalition government aren’t achievable or even unlikely to be achieved, they haven’t actually happened yet.

Speaking on the Today show this morning, Shadow Treasurer Chris Bowen made this point when Nine’s Chris Uhlmann said the Budget “gives more of a surplus” than was handed over in 2013 when Labor lost to the Coalition.

“It forecasts a surplus, it hasn’t delivered a surplus,” Mr Bowen said. “Just look at that surplus. Nearly a quarter is from spending less on disabled people, which is not something to be proud of, underspending the National Disability Insurance Scheme.

“That is almost a quarter of the surplus. The rest comes from a rather optimistic projection for wages growth.

“The only thing consistent about this government is they had to downgrade wages growth from Budget to Budget, so they had to do it again tonight. Then like the magic beanstalk, up it pumps towards the end of the forward estimates.”

In last night’s interview, Sales also asked Mr Frydenberg whether the government’s slated tax cuts for millions of Australians risked being viewed “cynically as a political bribe”.

“It’s not at all,” Mr Frydenberg said.

The Treasurer insisted it was an extension of the existing tax offset introduced last year. It will increase from $530 to $1080 for singles, or up to $2160 for couples.

“If you have a two-income family, let’s say a teacher and tradie both earning $50,000 or $60,000 a year, in 13 weeks’ time, they will get $2160 additional into their pocket,” Mr Frydenberg said.

“That’s money that will go to the quarterly energy bill, the yearly car insurance. This is real money to real people and it’s rewarding their effort.”

But Sales fired back, asking if that wasn’t a sign of a “policy failure” that one-off payments were needed rather than long-term plans to lower the cost of living.

“We are taking those actions, but that’s not mutually exclusive,” Mr Frydenberg said.