Just six months ago the Australian Treasurer was firmly sticking to his government's promise of a surplus of just over one billion dollars this financial year. Now the Prime Minister has had to admit that there will be a deficit of approximately twelve billion dollars.
How could they have got it so wrong?
I believe that there are two factors that have contributed to this.
Firstly they went ahead and committed billions of dollars on the assumption that newly introduced taxes would bring in the revenue required. Unfortunately most of these new revenue raising measures were poorly conceived and implemented and brought in just millions instead of the billions that they had already committed.
Secondly. They are saying that part of the deficit is due to lower tax revenue from businesses that are making lower profits and thus paying less tax. Perhaps they should investigate how things such as the Carbon Tax and the impost of the Mining Tax has had on company profits. Companies and indeed even individuals are holding back due to higher costs and uncertainty about future ill thought out ideas that have been mooted by the Labor Party.
Surely a budget must take into account every thing that could have an influence on the final outcome. It must be constructed on a responsible investigation of these influences and be neither wildly optimistic or to timid.
A thirteen billion dollar turn around in less than six months must surly indicate that the original budget was wildly optimistic or that the spending by this government is totally out of control. I believe that it is a combination of all of the above.
Please feel free to comment.