Originally published in The Guardian on April 4, 2024

Budget, Julia Gillard rightly said, are about choices. And those choices are a lot more important than whether or not the budget is in surplus or deficit

With a month to go before the budget no doubt the standard media commentary will be obsessions over whether or not the budget will be in surplus.

Everyone should know that the final budget outcome will make no difference to their lives and will almost certainly be different to the number suggested in the budget papers on the second Tuesday in May. Last year the budget predicted that 2022-23 would come in as a $4bn surplus. That estimate was made with just 2 months to go in that financial year and yet the Treasury was massively wrong – it ended up being a$22bn surplus.

Did that difference make anyone richer? Did it provide better services or lead to an increase in JobSeeker? Nope.

Whether or not the budget is in surplus or deficit will likely come down to fluctuation in the price of iron ore and gas and whether or not the Treasury’s estimates for employment and wage growth end up being over or under stated. (See above!)

What is important is what the government spends money on and how it chooses to raise revenue.

We have seen a vast array of woeful spending choices – such as the Inland Rail link which has no hope of being profitable or even generating a return, but it will take up at least $31bn if nothing more goes wrong (it most certainly will). That money could have been used instead to build over 60,000 houses – all of which could be sold to people at reasonable prices. It could have been used to improve education building and equipment at public schools.

Heck it could have been used to build 15 hospitals as costly as the Royal Adelaide Hospital was to build.

Similarly the money spent on AUKUS is essentially money allocated in such a way as to deliver Australia not only no defensive capability in the next 20 years, but also no economic benefit that will lead to wider productivity capacity or research – as all R&D associated with the project will be owned by the US military.

The big number of the budget is actually among the least important. After the massive – and necessary – deficits during the pandemic, it is high time we stop pretending a budget surplus means anything about economic management and instead look at what choices in the budget are being made.

Between the Lines Newsletter

The biggest stories and the best analysis from the team at the Australia Institute, delivered to your inbox every fortnight.

You might also like

Stage 3 Better – Revenue Summit 2023

by Greg Jericho

Presented to the Australia Institute’s Revenue Summit 2023, Greg Jericho’s address, “Stage 3 Better” outlines an exciting opportunity for the government to gain electoral ground and deliver better, fairer tax cuts for more Australians.

Richard Denniss: National Press Club Address

by Richard Denniss

On Wednesday, 31 January 2024, Richard Denniss and Allegra Spender MP addressed the National Press Club for a debate on the Stage 3 tax reforms. **Check against delivery** [See below for transcripts] Tax is good. Tax is an investment in our society and the highest taxed countries in the world also happen to be the