Wayne Swan’s Pre-Budget Excuses Speech Today: What a Depressing Read

Has Australia ever had a federal Treasurer as underwhelming as Wayne Swan?

Reading Swan’s latest effort – a speech he gave in Queensland today entitled ‘The 2011 Budget and a Tale of Two Booms’ – is nothing short of depressing.

Swan makes three central claims, which are at once inconsistent and unsupported by the evidence.  First he gives excuses about why the budget will not be very good; secondly he boasts of achievements not yet delivered; and thirdly he attacks the Howard Government for not doing as well as him.

Swan offers every excuse short of ‘the dog ate my homework.’  He starts with natural disasters: the Queensland flood, Christchurch earthquake and Japanese tsunami are all, it seems, responsible for knocking Wayne’s plans off track. 

The notion that we should ‘expect the unexpected’ is evidently unfamiliar to Mr Swan.  Is it really surprising that after three huge budget deficits in a row - $27 billion, $57 billion and $41 billion respectively - the Government’s fiscal position is more vulnerable to unexpected shocks than if he had done a better job before now?

Swan’s ‘natural disasters’ excuse is topped by his next one: apparently Australia is now experiencing a ‘bad boom.’  By contrast, the previous Coalition government was the beneficiary of a ‘good boom’ between 2004 and 2007.

What’s the difference?  According to Swan, the bad boom involves consumers saving not spending; a higher exchange rate; and terms of trade likely to fall gradually.   In contrast, his lucky predecessor got a boom with rapid consumption growth and sharply rising terms of trade.

It is true that tax revenues rose sharply from 2004-05 to 2006-07: up 16% to $272 billion.  But what has happened since?  Apart from a temporary dip in 2009-10, growth has continued. 

According to the government’s mid year estimates, tax revenue will be $313 billion.  Swan’s speech today revealed that tax collections are down about $4.5 billion on budget, but that still leaves revenue at $309 billion, a further 13 per cent higher than in 2006-07. 

Swan’s claim is absurd.  Yes, tax revenues rose during the earlier phase of the boom – but they are still rising and all the projections suggest they will continue to rise strongly.

Swan’s excuses are mixed with boasts about achievements not yet delivered, in particular his claim that the 2010-11 budget ‘began the fastest fiscal consolidation since records were first kept half a century ago.’

This sneaky phrase would allow a multitude of interpretations – but it seems to be a boast about how quickly the budget will return to surplus following the worst deficit year of the cycle (which in this case was a deficit of $55 billion in 2009-10). 

The key point, of course, is that a return to surplus has not yet been achieved.  Given Mr Swan’s dismal trail of deficits to date, he would be better advised to stop talking and start acting.  When he has actually delivered some fiscal improvements then he might be more deserving of attention.

But it is Swan’s attacks on the Howard government’s budgetary track record which are the most ludicrous part of today’s effort.  Apparently, there were “rivers of gold…wasted” by Peter Costello during the boom in 2004-07, when by contrast Swan is battling “boom conditions without the boom revenues.”  (This is as nonsensical as claiming you have ‘a feast without the food’.)

It is no wonder Swan doesn’t even try to support his ritualistic political abuse with any actual facts or numbers.  He fails to mention that the Howard government kept spending increases to 11.4% between 2004-05 and 2006-07 when revenue rose 16%.  He is silent about the Howard Government’s track record of delivering a surplus every year bar one between 1997-98 and 2007-08. 

Wayne Swan is failing as Treasurer.  He does nothing to persuade us to the contrary by offering excuses for his failures; by boasting about things he hasn’t done yet; and by contrasting his own non-performance with that of a government which delivered fiscal discipline for eleven years.