In the BS world of elections and the unbelievable promises politicians make to get into power, one of the craziest issues to focus on is what the future deficits are likely to be in three or four years’ time. Why do I say something so uneconomic as this? Experience!

Want proof?

This week the AFR gave us some clarification linked to a headline that read: Albanese’s budget deficit ‘lie’ challenged.

Phillip Coorey and John Kehoe, two respected journalists, kicked off this story with the following: “Anthony Albanese has continued to insist his government turned a $78 billion deficit into a surplus, despite the deficit figure only ever being a forecast that never materialised, prompting the opposition to brand him a liar.”

On the election campaign, the PM has told us: “We’ve ... turned a $78 billion deficit into a $22 billion surplus, followed it up with another surplus, followed it up with halving the deficit.”

The problem with this is that this is double-Dutch eco-speak that’s created to impress the economically untrained voters of the world, which would probably be most voters.

What the AFR scribes pointed out is that the $78 billion deficit was a projected deficit by Treasury during the 2022 election campaign, but it never existed! It was a forecast. In reality, the actual deficit that was eventually calculated after June 30 of that year (only two months or so later) was only $32 billion!

So, economically speaking, the PM’s team turned a $32 billion deficit (partly created by the Morrison Government’s spending to prevent Covid dropping us into a recession) into a $22 billion surplus.

Economists will tell you that a lot of great budget surpluses crowed about by Treasurers of different political colours are based on the luck of the economic cycle. And yep, Dr Jim Chalmers has been blessed by the Morrison big spend and by Dr Phil Lowe taking the cash rate down to 0.1% in 2020-2022.

That sparked great growth for the economy and jobs, but inflation meant 13 interest rate rises had to spoil the party. And that’s when the budget gradually turned into a deficit.

So, the true story is that the Coalition and the RBA did a lot in creating Labor’s surpluses but also contributed to the inflation story as well. Labor and the RBA have roles to play in explaining why inflation didn’t fall as fast as other economies. On the other hand, their failures on inflation have helped us not see unemployment go sky high.

The AFR says that “the Albanese government has recorded the sharpest first term increase in government spending as a share of the economy since Labor’s Gough Whitlam in the 1970s”. That explains why unemployment is low and the deficit is climbing fast.

In summary, I’ve shown that you can’t trust politicians with their boasting of economic success and what they promise. Luck of the economic cycle, the growth of the global economy and what the private sector contributes through investment and innovation can make governments look good, or bad as well.

So, let’s look at what both leaders (Albo and Dutton) are offering.

Here are the ‘numbers’ promised from both sides:

Explaining why the Coalition is spending more, the AFR reported this: “The Coalition’s deficits are $8 billion worse over the first two years than Labor’s pre-election budget due to temporary cuts to fuel excise and a tax offset, but are claimed $13.9 billion better in total over four years as deep public service cuts kick in.”

Looking at big differences in spending:

1. Labor has income tax cuts costing $17.10 billion via tax cuts of $268 per taxpayer in 2026-27 and $536 a year after that. The Coalition will give a one-time $1,200 tax offset for low- to middle-income earners in the next financial year, targeting individuals earning up to $144,000. This will cost the Budget $10 billion.
2. The Coalition will spend $21 billion on defence. Labor has no big plans for defence.
3. Both will spend $8.5 billion to boost Medicare bulk billing — they matched the promise on this big vote-catcher.
4. Both are spending $7.2 billion on the Bruce Highway upgrade — proving there are important seats to be won in Queensland!
5. On housing supply, Labor has allocated $10 billion, while the Coalition is throwing $5 billion at this important area.
6. The Coalition will halve the fuel excise for a year at a cost of $8.9 billion, while Labor has found $1.8 billion for energy power rebates.

These are the promises of our future supreme leaders. If they don’t materialise in the future because our next Treasurer says, “circumstances have changed” (as they do when they welch on a pre-election promise), remember what George Costanza of the Seinfeld TV show once explained: “Jerry, just remember, it's not a lie if you believe it.”