Let's be straight about this: Scott Morrison has no plan to return the budget to surplus.
He has no plan to cut federal government debt that he forecasts to be 19.2 per cent of GDP in 2017-18 – nearly double what it was when the coalition was screaming about a "budget crisis" in opposition.
Oh, this treasurer, like his predecessors, has hopes and dreams that everything will turn out for the best, but there is nothing in his budget that adds up to a plan for the government to do anything that would achieve the above-trend growth the economy would have to sustain for at least five consecutive years.
The figures and graphs tossed around by the government to claim federal government debt will start shrinking are simply made up to fit a scenario that would start reducing government debt. It's a happily-ever-after fairy story with no basis in fact.
Indeed, Treasury seems so embarrassed by the figures in the non-existent plan that it has downplayed them more than usual. Previously the main summary charts for the budget showed Treasury's best guess for how the current financial year is finishing, its forecasts for the next two financial years and its "projections" for the two years after that. This time round, those two projection years have been tucked away in the finer print because they have proven to be utterly useless.
There could have been a plan to provide a basis for believing the concocted projections if the government had followed the advice the Reserve Bank has been gratuitously offering, but it hasn't. I'll come back to that lost opportunity. Instead all Morrison manages is rhetorical flourish and a massive assertion that trimming company tax a little will magically spur above-trend growth.
("Trend" real GDP growth has been downgraded to 2.75 per cent. The Treasury forecasts we'll hit 3 per cent growth in 2017-18, mainly thanks to the dive in resources investment bottoming out. The 3 per cent figure "projection" beyond that air guitar.)
As regular as killer toys at Christmas and features about HSC results, there's a seasonal need in the budget aftermath to spell out what those projected figures are that the politicians are posturing about.
Treasury explains (on page 54 of Budget Paper No 1, if you're interested, Malcolm):
"Crucially, the medium-term projection methodology assumes that spare capacity in the economy is absorbed over five years following the forecast period."
In English, that means that all the figures after 2017-18 aren't even based on a Treasury guess. Instead, they are the outworking of how the economy would have to grow if it was going to be absolutely spiffing in five years' time. They're Hans Christian Andersen figures, they're from Fantasyland, the happiest kingdom of them all – but they have had a habit of turning out to be more like the work of the Brothers Grimm.
And the federal opposition is indulging in the same silly game, waffling away about their 10-year projections and demanding to know what the proposed company tax cut will cost in a decade. They may as well ask for next week's Oz Lotto numbers as well.
The government can't even fall back on Malcolm Turnbull's justification for leaving negative gearing untouched – "it's common sense". It's not "common sense" for most people that cutting company tax will necessarily mean most the of that foregone tax money will flow to workers and drive the economy faster than its trend rate.
That is nice theory promoted by Treasury and those with most to gain from lower company tax, but they are short of real-world examples to prove their case. Ken Henry's first stab at a mining tax also was a very fine theory, but it also was rubbish in the real world. (Turns out the mining industry would have done very nicely out of it – the rest of us are lucky it didn't happen.)
So Scott Morrison's claim to deserve to keep his job because he has a plan is false.
Nonetheless, there were some good things in his budget. He might have gone a tad too far in the life-time limit on after-tax superannuation contributions, but displaying "fairness" by cleaning up the worst of the tax haven's excess was admirable, perhaps even brave in Liberal ranks. The youth employment internships are worth trying, despite the knee-jerk reaction it provoked from the left. The need, both economic and social, for the Google tax is a no-brainer. And trimming company tax would not be a bad thing – if it was part of holistic tax reform ship.
Leaving negative gearing untouched while curtailing superannuation was simply dumb and, as everyone knows, done purely for the usual base political motive of trying to wedge the other side.
But both the government and the opposition have failed my simple and on-going budget integrity test by protecting the salary packaging industry by preserving the expensive and iniquitous novated lease lurk.
The whole exercise could and should have been much better and would have actually offered a plan if the government had been prepared to take that RBA advice: borrow big and long to invest in infrastructure that would more than pay for itself.
That has been suggested a number of times by the governor and his deputy-cum-successor while warning that we were nearing the limits of what monetary policy could be expected to achieve.
In his first speech after last year's budget Governor Glenn Stevens effectively damned Hockey's effort with faint praise. This time round, he got in his retaliation first by cutting interest rates on Tuesday afternoon, clearly with the knowledge that there was nothing in the budget to underpin the extra investment the economy needs. It was left to the central bank to go back to pushing on its piece of string.
Stevens is scheduled to give his next speech on May 24. He could well repeat these paragraphs from his budget post mortem last year:
"As often remarked, infrastructure spending has a role to play in sustaining growth and also in generating confidence. I am doubtful of our capacity to deploy this sort of spending as a short-term counter-cyclical device. The evidence of history is that it takes too long to start and then too long to stop.
"But it would be confidence-enhancing if there was an agreed story about a long-term pipeline of infrastructure projects, surrounded by appropriate governance on project selection, risk-sharing between public and private sectors at varying stages of production and ownership, and appropriate pricing for use of the finished product.
The projects would have an effect across the economy, Stevens said.
"The suppliers would feel it was worth their while to improve their offering if projects were not just one-offs. The financial sector would be attracted to the opportunities for financing and asset ownership. The real economy would benefit from the steady pipeline of construction work – as opposed to a boom and bust. It would also benefit from confidence about improved efficiency of logistics over time resulting from the better infrastructure. Amenity would be improved for millions of ordinary citizens in their daily lives. We could unleash large potential benefits that at present are not available because of congestion in our transportation networks."
The reasons infrastructure projects are being held back are political, rather than financial.
"The impediments to this outcome are not financial. The funding would be available, with long term interest rates the lowest we have ever seen or are likely to.
"The impediments are in our decision-making processes and, it seems, in our inability to find political agreement on how to proceed.
"Physical infrastructure is, of course, only part of what we need. The confidence-enhancing narrative needs to extend to skills, education, technology, the ability and freedom to respond to incentives, the ability to adapt and the willingness to take on risk. It is in these areas too, where there are various initiatives in place or planned, but which often do not get enough attention, that we need to create a positive dynamic of confidence, innovation and investment.
"That is the upside we need to create."
Instead, Scott Morrison and Malcolm Turnbull are sticking to the furphy of the coalition's "record" $50 billion infrastructure investment with a few bits and pieces thrown in from time to time. That $50 billion is spread over six years. It's actually not much at all.
Rather than being something to boast about, it should be a source of embarrassment – a reminder of the missing plan.
Correction: In an earlier edition of this story, a now-embarrassed Michael Pascoe pointed out that Budget Paper No 1 only runs to 308 pages, so there could be no page 311 with Malcolm Turnbull's favourite
graph of fairytale figures. But there is a page 11 of section 3 - thus a page "3-11".
