The Prime Minister has finally uttered the dreaded word that Labor governments are all too familiar with. Deficit.
More specifically a budget deficit.
In a remarkable display of blandness (even by his standards), Kevin Rudd conceded that the Australian Government will spend more than it receives this financial year.
Despite his impressive rhetoric on being an economic conservative which includes such gems as; “I am committed to Budget surpluses. This forms the economic bedrock for my plan for the nation’s future,” Kevin Rudd has shown his true colours.
Only a few days ago, senior Ministers were maintaining that there was no need for a deficit. We were assured that Australia would not enter a recession and economic growth would be over two per cent.
This was supported by Treasury forecasts in the Mid-Year Economic & Fiscal Outlook (MYEFO) released only a few weeks ago.
So what has happened in the last three days that has seen the weekend deficit deniers suddenly change their tune to “deficit required”?
Reputable international economic forecasters believe that Australia will avoid a recession. A position supported by Mr Peter Costello, a former Treasurer with a great deal of knowledge in this area.
This suggests that further economic stimulus is not required given the first Rudd stimulus hasn’t even been received yet.
More importantly, if the Treasury and the limited talent in the Government cannot make an accurate economic forecast that will survive more than three days, exactly what can we rely on?
If three days is too long for the Rudd Government to get next year’s budget forecasts right, what hope have they got planning for Australia’s long-term economic interests?