Terry McCrann: Dodgy forecasts the only certainty on federal budget night

The one thing you can say with absolute certainty about every budget is that every forecast in it will be wrong — so take claims about controlling inflation with a pinch of salt.

Budget night May 2012 and a Labor treasurer kicking off his speech with “The four surpluses I announce tonight”.

We got instead, four deficits adding up to $144bn – all added to the national debt, further blowing out the annual interest bill YOU are still paying with your taxes.

Fast-forward 12 years to budget night May 2024 and another Labor treasurer will be announcing “inflation will be back below 3 per cent by the end of the year”.

Hmm.

Back in 2012, then treasurer Wayne Swan – backed up by his youthfully energetic chief-of-staff, fellow Queenslander, a certain Jim Chalmers – claimed the (Treasury forecast) surpluses would deliver lower interest rates.

Fast-forward again 12 years, and that will be the clear implication, if not the explicit claim, made by the now much-elevated Chalmers to the keeper of our $700 billion dollar-a-year budget spendathon.

Prime Minister Anthony Albanese and Treasurer Jim Chalmers with the 20024 budget papers. Picture: Martin Ollman

You’d think; you’d really even thunk, that Chalmers above all people – except perhaps the said unfortunate Swan – would know that Treasury forecasts are always, and I mean always, dodgy.

The one thing you can say with absolute certainty about every budget is that every forecast in it will be wrong. Either just marginally wrong, or all-too often dramatically way-off-the planet wrong.

Indeed, Treasury can’t even ‘predict the past’.

Tuesday’s budget has to ‘forecast’ what has happened in the 2023-24 financial year – which obviously only ends in seven weeks.

Yes, 45 weeks of the year are already ‘in’ – Treasury’s computer, so to speak – but it will still get the forecasts for the full 2023-24 year wrong.

So, very simply, I for one would not be taking the Treasury/Treasurer forecasts of inflation coming back within the Reserve Bank’s 2-3 per cent target, ‘to the bank’, so to speak.

Indeed, neither will Reserve Bank governor Michele Bullock.

She won’t be immediately ‘locking in’ a rate cut at the RBA’s next meeting in mid-June because the Treasurer – and indeed, one of her own board members, Treasury boss Steven Kennedy – has guaranteed inflation is beaten.

Originally published as Terry McCrann: Dodgy forecasts the only certainty on federal budget night