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Articles on Surplus

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Each year the government runs a A$40 billion deficit, it increases the lifetime tax burden for households headed by a person aged 25 to 34 by A$10,000. Lukas Coch/AAP

Young Australians will wear the costs of Turnbull’s middle income tax cut

Unless the government is willing to increase taxes elsewhere to pay for tax cuts there will be longer-term costs for the budget and the economy. And younger Australians will wear these costs.
Chris Bowen stressed that Labor’s fiscal program, when fully released, would ‘see us return to budget balance in exactly the same time frame as the government’. Mick Tsikas/AAP

Labor to release savings package

The opposition will attempt to strengthen its economic credentials by announcing on Friday a package of savings to help pay for its policies and improve the budget bottom line.
Treasurer Joe Hockey’s failure to talk about basic measures of the economy in his second budget speech is telling. AAP/Mick Tsikas

Three missing letters say it all about Hockey’s budget pitch

A budget speech that fails to discuss basic measures of how the economy going is revealing in itself. Joe Hockey is the first treasurer since at least 1981 not to mention GDP.
Treasurer Joe Hockey and Finance Minister Mathias Cormann speak to media during the 2015 budget lockup. AAP Image/Lukas Coch

Path to budget surplus built on shifting foundations

The impact of 2015 budget measures delivered by the government pale into insignificance when compared with the external factors hurting the budget bottom line.
Servicing the current level of public gross debt is not a problem for Australia. Image sourced from

Explainer: the role of budget deficits

There continues to be a great debate around Australia’s fiscal position. Yet, budget deficits are, in fact, a natural outcome of the business cycle. In a policy brief, co-authored by myself and colleagues…
What is the “optimal” level of public debt? Persistent deficits do not automatically lead to a situation where the government resembles a household under mortgage stress.

Debts and deficits: why a string of deficits does not necessarily spell the end of the world

The debate about long-term public finance and the role of government is one that is most definitely needed. However, there are two aspects to this debate that are often conflated. First, there is the issue…
Tony Abbott’s attack on Australia’s debt and taxation levels is sorely misguided. AAP/ Alan Porritt

Abbott’s budget bluster highlights a deficit of social responsibility

Today’s announcement by the government that it has a $12 billion “black hole” had the status of a confession. It needn’t have. All talk of “black holes”, “revenue shortfalls” and “structural deficits…
Without considerable changes to Australia’s fiscal policies, both state and federal governments are likely to face significant budget deficits for the next ten years. AAP

Australian governments face a decade of budget deficits

Structural changes in the economy are likely to leave Governments across Australia facing budget deficits of around 4% of GDP for at least the next decade, according to research released today. The Grattan…
A clear-headed analysis of the budget must delve beyond the buzzwords and political rhetoric. AAP

Making sense of a bootstrap budget

Each year the budget is like an annual health check on a patient with many complexities. In a black coat, not a white one, the august Treasurer reports the nation’s temperature, provides much-needed tonics…
System 1 thinkers on the left, System 2 thinker on the right? AAP

Budget 2012: Why the experts will get it wrong

It’s an old joke, but hard to resist around Budget time. That is, that economic forecasting was invented to make astrology look respectable. Over the past few days we’ve heard a lot about how notoriously…
Given the RBA’s decision to slash the cash rate by 50 basis points, it’s hard to justify Treasurer Wayne Swan’s pursuit of a budget surplus. AAP

Cutting rates, then tightening fiscal policy? Trying to make sense of the quest for a surplus

The former Governor of the Reserve Bank, Bernie Fraser, hit the nail on the head the other night when he found it absurd that the Reserve Bank could be reducing interest rates one day, while a week later…
Size does matter: rather than be concerned about achieving a surplus or a deficit, the government should be focusing on how to manage its debt. AAP

Don’t forget the debt: there’s more to fiscal prudence than a return to surplus

Treasurer Swan’s commitment to bring the government budget into surplus in 2012-13 may be a political imperative, but is not good economics. The focus for prudential fiscal management should instead be…
Parlous states: despite staring down the barrel of recession, Victoria is set to deliver a budget surplus. But is this the right move for a stagnant economy? AAP

Is surplus the key to lifting Victoria out of its parlous state?

The Victorian government is set to hand down its budget this week. Premier Ted Baillieu is committed to returning Victoria back into the black, after it spent the first six months of this year in a $341…
Political, rather than economic: economists say there is no direct link to surpluses and lower interest rates. AAP

Can surpluses lead to lower interest rates?

The Federal Government is continuing its pre-budget surplus sell, with Prime Minister Julia Gillard directly linking its plans to return the budget to surplus to lower interest rates. Gillard will use…

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