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Speaker 1: For a labor government. It's about as blatant as far

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Speaker 1: as I could work out as you could get despite

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Speaker 1: the fact Australia's running massive deficits. This is the budget

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Speaker 1: last night. They handed out tax cuts for everybody. There's

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Speaker 1: medical or medicare funding, make a cheaper go to the doctor.

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Speaker 1: They're going to pay a chunk of your power bill,

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Speaker 1: going to play a slice off your student loan if

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Speaker 1: you've got one. It's almost as though there's I don't know,

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Speaker 1: an election coming up. HSBC Chief economist Paul Bloxham's with us. Paul,

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Speaker 1: good morning to you. Good morning, So more money as

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Speaker 1: opposed to politics. But there's this idea that they're going

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Speaker 1: to run deficits forever in a country that once ran surpluses,

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Speaker 1: have they sort of given up?

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Speaker 2: There wasn't very much in the budget for trying to

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Speaker 2: deal with this particular challenge and that was actually the

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Speaker 2: main thing we highlighted when we looked at it and

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Speaker 2: when we thought about it. You know, the Australia is

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Speaker 2: running budget deficits, as you say, over the rest of

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Speaker 2: the forecast horizon. They're what you call a structural budget deficit.

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Speaker 3: So really what that means is the government is saying,

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Speaker 3: for all of the commitments we've got in terms of

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Speaker 3: spending over the forecast horizon, we're not going to get

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Speaker 3: enough tax revenue to meet those spending commitments. And that's

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Speaker 3: going to be the state of affairs overcoming overcoming years.

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Speaker 3: And they haven't really delivered any solutions for fixing that

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Speaker 3: structural budget deficit.

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Speaker 1: No, exactly, but they're bringing in more than they've ever

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Speaker 1: brought in, six hundred and sixty three billion dollars from

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Speaker 1: tax and yet they still can't make ends meet.

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Speaker 2: That's right, there is more tax revenue coming through. There

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Speaker 2: was an upside surprise actually again in these numbers, So

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Speaker 2: this is the fourth year where there's been an upside

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Speaker 2: surprise in fact that sort of the three previous budgets

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Speaker 2: delivered really substantial upside surprises to revenue. A lot of

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Speaker 2: it's been funneled back into commitments to spend. I think

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Speaker 2: underpinning the numbers also, there's an assumption that productivity picks

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Speaker 2: up in the economy that's quite strong, and there's an

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Speaker 2: assumption that there is actually still quite a bit of

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Speaker 2: trimming going on in some of the bigger items like

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Speaker 2: the National Disability insurance game. So there's a lot of

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Speaker 2: there's questions as to whether even the numbers that are

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Speaker 2: presented are actually necessarily going to get even the structural

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Speaker 2: budget deficit that's there. So, you know, the way you

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Speaker 2: fix this problem, you've got three things. You can only

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Speaker 2: do it three ways. You either find ways to trim

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Speaker 2: back on spending, you find ways to get more tax revenue,

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Speaker 2: but the tax revenue is actually pourcasts to rise anyway,

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Speaker 2: or the third one, which is very very much you

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Speaker 2: know what ought to happen. You try to boost the

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Speaker 2: economy's growth. If you can boost growth in the economy,

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Speaker 2: that's the best way to do this, absolutely hands down.

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Speaker 2: But to get that to happen, you've got to take

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Speaker 2: action on reform that gets productivity to list. And this

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Speaker 2: is the big this is the big, fundamental underlying challenge

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Speaker 2: Australia faces. That productivity is very poor. It's been going backwards,

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Speaker 2: not forwards. It's been falling over the past year. It's

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Speaker 2: been to the same level right now that it was

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Speaker 2: in twenty sixteen. We haven't had any productivity growth in

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Speaker 2: eight years in Australia and there's very little there's you know,

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Speaker 2: the budget is very focused on spending measures as you describe,

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Speaker 2: as we head towards an election before the seventeenth of.

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Speaker 1: May, Grave Insight, Paul appreciate it very much, pull blocks

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Speaker 1: them out of HSB. See the forecast for growth has

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Speaker 1: gone from one point five to two point two five.

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Speaker 1: So this question mark as to whether that's believable or not.

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Speaker 1: But as I've said on this program for many, many years,

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Speaker 1: not that I suspect that many voters really care about it.

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Speaker 1: But if you think Australia is great, it's not. There's

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Speaker 1: a lot wrong with Australia. And if you look at

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Speaker 1: the documentation in the budget last night, it's all laid

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Speaker 1: out there, but they'll pretend that it's all good and fantastic.

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Speaker 1: And as long as you're getting a little bit of

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Speaker 1: something in your back pocket, what do you care? Anyway?

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Speaker 3: For more from the Mic Asking Breakfast, listen live to

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Speaker 3: news Talks. It'd be from six am weekdays, or follow

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Speaker 3: the podcast on iHeartRadio.