Labor’s ‘surplus’ Budget is just smoke and mirrors – and Aussies should be worried… PETER VAN ONSELEN reveals the damning details that prove Australia is on the road to financial ruin

This year’s Budget highlighted just how fiscally doomed we are as a nation, even if the government attempted to hide the fact in plain sight.

And they’ve used a mix of deception and trickery when doing so. 

Before we even got to Budget day itself, ‘the surplus’ was strategically leaked to the media: coming in at $9.3billion, it surprised most observers on the upside. A product of favourable terms of trade.

Sounds good, right? Wrong.  

It wasn’t the surplus for the coming financial year, the year all the new spending and tax cuts are slated to start. It was a surplus in the financial year that ends in just six weeks: the 2023/24 financial year.

That’s come and gone. The next four financial years are all in deficit, and big time. The first is a deficit of nearly $30billion, the next year it rises to nearly $50billion. Remember, that national debt is more than one trillion dollars already. 

Even just paying off the interest bill on that quantum of debt is hard. The fact we are continuing to just rack up more and more debt – with no plan to do anything about it – should be disturbing to all Australians.

And let’s be clear, both sides of politics are to blame for this mess.

Budgets are supposed to be about the coming financial year, not the last. The substance of Treasurer Jim Chalmers speech focused on new spending and tax cuts that happen next financial year, spruiking income tax cuts as the ‘foundation stone’ of the Budget.

But by linking in an old surplus, Chalmers tried to create the false impression that all the new spending and tax cuts was happening within a fiscally prudent envelope, because he was handing down a surplus.

Only he wasn’t.

It was tricky indeed for the government to try to focus backwards on the surplus in the financial year that is about to end but forwards on new spending and tax cuts in the next one.

That’s called having your cake and eat it.

Making the situation even worse, via some tricky accounting there is a further $80billion of spending that isn’t even counted in the wall-to-wall Budget deficits in the years to come.

And these politicians have the temerity to lecture business leaders when they think they are being less than forthcoming when quizzed for the cameras at show trials such as parliamentary committees.

What a much of hypocrites we have serving us in Canberra.

Unless the major political parties find a way to work together to repair the Budget’s financial underpinnings, future generations are going to be unfairly gifted massive debt with difficult-to-manage annual interest payments.

A situation made worse by baked-in recurrent spending that Australians are growing used to and will find hard to live without when the day of reckoning comes and the financial tap gets turned off, as it inevitably has to. 

We are living beyond our means, it’s that simple. Families can’t do it for long when doing their own budgeting, and neither can countries.

The only way to fix the situation is going to be via tax hikes, cuts to spending, or both. And reforms to the way we tax, and the way state and federal governments work together, also needs to happen.

Most concerning, no one seems to be much bothered by government debt anymore, meaning that racking it up doesn’t damage governments politically the way it used to.

We must force a change of approach, so that whoever is in power becomes more fiscally prudent.

Because both sides of politics have let spending get out of control for so long that complaints from opposition become akin to white noise.