The budget is balanced

The final figures for the budget of 2017/18 were released yesterday.
Naturally given the internet some-one has written about it before me and done a better job than I would have.
Warren Hogan has done this.
One interesting point is the estimates for the NDIS were way too much. This could very well mean the large increases we told previously was making it a very costly operation for the budget are over. Most people associated with the industry did say the increase in costs would be large to start with. It could well be they were right all along.

This 'improvement' has come about because of large increases in revenues.Those large tax deductions companies were using after the GFC have now gone. also important the Current government has continued the use of spending restraint the previous government utilised. However as Ross Gittins points out all the low hanging fruit has gone. to continue this restraint is going to be much much harder and it is hard to see this.


A couple of associated points.
The budget was already in balance on an accrual accounting basis. What I find amazing ( perhaps not) is that the budget papers never have the accrual figures in them. Why not? Cash accounting can be very easy to manipulate. Both parties have done this and continue to do this.

The structural balance of the budget has improved. Why?  The deficit was there because of revenue decisions made. No decisions have been made to improve revenues over the business cycle so the mystery continues. We should note the ALP already has a number of such policies to enact if they win office.
I strongly suspect that any major economic downturn will amazingly show a deterioration in the structural budget as occurred in Ireland following the GFC.

NOW  is the time for fiscal austerity. Strong nominal GDP growth means fiscal consolidation will facilitate economic growth as Keynes said in 1936 and not hold it back as it does when the economy is weak.

On a political note on my back of envelop calculations the ALP would have the Revenue to GDP ratio back to levls we saw when John Howard was Prime Minister.