A closer look at the budget papers reveals just how contrived the budget's return to surplus is. Wayne Swan is hardly the first treasurer to resort to "reprofiling" (a word his people invented), but he's the first to use it on such a massive scale, turning the budget into a bulldozer.
Reprofiling means changing the previously announced timing of budget spending or taxation measures. Deciding not to proceed with previously promised tax changes (the 1 percentage point cut in the company tax rate, the standard deduction, the limited 50 per cent discount of tax on interest income) is one thing. In contrast, deciding to defer by two years the increase in the cap on super contributions by older workers is an example of reprofiling.
Nothing demonstrates how contrived this budget is better than the expected real growth in government spending. In the financial year just finishing, 2011-12, spending is expected to have grown by a whopping 4.8 per cent. In the budget year, 2012-13, it's budgeted to fall by a whopping 4.3 per cent.
But the following year it resumes its rapid upward climb, growing by 3.7 per cent. The year after, up by a modest (!) 2 per cent, and in the last year of the forward estimates, 2015-16, up by 2.9 per cent.
The budget papers helpfully note that, if you roll together the old year and the budget year, the average rate of growth is just 0.3 per cent. This tells us, first, much of the real fall in spending in the budget year is achieved by the simple expedient of pushing spending back into the old year.
Second, to have real spending growing for two years in a row at an infinitesimal rate is quite unnatural. And since there have been no announcements of swingeing spending cuts, such a situation could only have been contrived.
In fact, Swan was moving the budgetary furniture around in at least the two previous budgets (and last November's midyear budget review) to make ready for the miraculous return to surplus in 2012-13.
But so extensive have been his labours to bring the planned surplus about that a more robust metaphor is called for. Swan has invented the fiscal bulldozer. The Treasurer always has a big pile of spending in his blade that he's pushing forward into later years.
And, because budgets occur in May, the dozer can always be turned around and used to push spending back into the few remaining weeks of the old financial year.
But let's focus on the measures announced last week. Swan announced "saves" worth $33.6 billion over five years (the old year, the budget year and the three "forward estimate" years) less "spends" worth $22.4 billion over five years. So for every $3 he saved, he gave away $2.
Note, however, that half his saves were tax measures rather than cuts in spending. Of the total value of tax saves, only 40 per cent represents actual tax increases, while 60 per cent represents decisions to abandon or defer tax reductions included in the mining tax package.
When the package was first announced, pretty much all the revenue expected to be raised by the new tax was used to pay for "reforms" of other aspects of the tax system. These alleged reforms were very roughly based on recommendations of the Henry report. But now, roughly $2.2 billion a year of the mining tax's annual proceeds is to be used to finance increased government spending rather than reductions in other taxes.
The budget papers link the changes to the mining tax package to the plans for an increase in the family benefit, the new (pitiful) allowance for people on the dole, the switch from the education tax refund to the "schoolkids bonus", the first stage of the national disability scheme and the increased spending on dental care.
In their efforts to make announcements sound momentous, it suits the pollies and the media to quote budget costs "over four years" (or five, if costs are being pushed back to the old year).
But we budget and think a year at a time, so this practice can mislead.
It's worth noting that, of the total saves of $33.6 billion, only 14 per cent apply to the budget year. This tells us Swan drew up this budget very much with an eye to the following years. Having orchestrated the planned return to surplus in 2012-13, he then had to make sure the budget stayed in surplus over the forward estimates.
Of his total spends of $22.4 billion, a mere 8 per cent apply to the budget year. This is another indicator of how contrived the budget is.
But it also helps explain how a supposedly tight budget could appear so generous, as well as revealing another modern trick: pre-announcement.
Rod Tiffen, of the University of Sydney, has beaten the economic commentators to making a significant point - increasingly, budgets are being used to announce measures that don't take effect for more than a year. Budget headlines are built on stuff that won't happen for ages.
In the case of new taxes, such delay is unavoidable. But that's rarely true of spending. Among the measures announced last week that don't start until July 2013 are the increase in the family benefit and the introduction of the national disability scheme. The dole increase doesn't start until March 2013.
Combine all this with the knowledge the government has never once honoured its grand pledge to increase defence spending each year by 3 per cent in real terms and you conclude Swan's fiscal bulldozer will be on the job again in next year's budget - and any to be delivered by his successors.
