Why is Treasurer Morrison selling snake oil budget projections?

“From the turn of this century right through to the global financial crisis, the Australian government’s income never dipped below 25 per cent of gross domestic product. Then it collapsed and hasn’t fully recovered. …Spending is 25.9 per cent of GDP, revenue is 24 per cent” according to Peter Martin, Economics Editor for The Age. Peter Martin provides Morrison’s claims about how this will be solved.

The budget forecasts that revenue will be 24.2 per cent of GDP in 2016-17.

Budget projections beyond 2017 show revenue at just over 25 per cent.

These projections include assumptions an unemployment rate falling to 5 per cent, and an “economic growth rate of 3.5 per cent a year (“above trend”) for five consecutive years.”

This would be a huge turnaround, as currently unemployment is around 6% and growth is 2%. These figures are going in the opposite direction to the projections.

Yet commodity prices are collapsing, and a new International Monetary Fund (IMF) report says that countries dependent on exports of commodities face losing about 1 percentage point of economic growth over the next two years, with oil and gas exporters to be hit the hardest. Australia’s LNG exports put Australia in this category.

We can’t believe that the Treasurer doesn’t know this. So why would he be trying to sell this story?

One reason comes to mind. His snake oil projections are designed to manufacture a more severe budget emergency to justify an increase in the GST, and continuing cuts to unemployment and welfare payments, health and education.

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