PETER VAN ONSELEN: The big lie about the Aussie economy we’re all falling for

Today, Treasurer Jim Chalmers poked fun at the deteriorating state of the economy.

Iron ore prices are falling, which will worsen this year’s already significant budget deficit.

Moreover, job growth is not what it once was, suggesting that unemployment could rise, putting further pressure on the budget.

This reality looms before you even think about the kick in the guts that Donald Trump’s tariffs would be to the Australian economy.

Meanwhile, the Prime Minister recently commented that the elections will take place in May.

Many commentators saw that as a mistake and a clear indication that he will serve a full term, meaning we will have a final Labor budget before election day in April.

The government recently announced that it would bring forward the budget when it issued next year’s meeting calendar.

But in reality, Labor is keeping its options open. By bringing forward the budget, there could be a budget and then an election.

Or it could rush to the polls in February or March and avoid having to submit a final budget – one that would reflect the deteriorating economic conditions that Jim Chalmers highlighted today. Including a huge deficit.

Clearly, if Labor thinks it can win by going to the polls early and avoiding the said budget, that could happen.

Especially when it knows there is no point in waiting for interest rates to fall, as the RBA has hinted that this may not happen until the second half of next year.

Ultimately, Albo will call elections when he thinks he is best placed to win them, sooner or later.

Although Chalmers has been forced to admit that he is losing control of his budget figures, this is unlikely to change the election outcome.

Labor showed last week that it is not above buying votes. The 20 percent reduction in HECS debt, which cost $16 billion, was nothing short of bribery. One designed to convince people to vote Labour.

Education Minister Jason Clare sold the announcement as having no budget implications.

That’s true, but just because our budget process has become such a joke, it’s easy for the treasurer to hide expensive items from the bottom line.

HECS is considered ‘out of budget’, like a lot of other expensive items.

The NBN is an out-of-budget investment, just like the costly Snowy Hydro 2.0 program.

And you can be sure that if Peter Dutton wins the next election and continues with his nuclear reactor policy, the cost of building them all will be outside the budget too. Billions more dollars are being spent inexplicably.

All told, off-budget items in which governments try to “pick winners” now cost taxpayers about $20 billion annually, according to economist Chris Richardson.

And that’s before you factor in the costs of things like HECS debt write-off.

Iron ore prices are falling, which will worsen this year’s already significant budget deficit

Throw in the billions of dollars that now have to be spent paying the interest on our national debt – dead money before you even think about paying back the trillion dollars in debt – and the reasons we are in economic trouble become all too clear.

But the problems don’t end there. Even within budget limits, future projections are likely to underestimate the rising costs of programs like the NDIS and overestimate Australia’s economic growth rates.

In other words, the deficit and rising debt could be even worse than it seems at first glance.

And in the midst of all this, the government is refusing to legislate the kind of large-scale tax and transfer reforms that we need and that economists have long called for.