Wednesday, July 14, 2010

Why Swan told all, again, just two months after the Budget

Swan said it was appropriate to provide an economic update partly because we have a new Prime Minister and partly to tell us about "moving the economy forward".

Why did he really do it? Well it wasn't (as you might think) to make a clean breast of the mining tax finances.

(And by the way, as I foreshadowed, it will make a motza)

It was because 10 days after writs are issued for the election the Treasury and Finance will release the Pre-election Economic and Fiscal Outlook - PEFO.

Frighteningly - for any Treasurer, Prime Minister and Finance Minister - it does this independently of them, one of the rare times the bureaucracy can say what it thinks, without consulting its political masters and receiving direction. (The other is the costing of policies)

The previous government got around this by releasing its mid-year economic and fiscal outlook, MEF0, a couple of months early just before the issue of writs so that when PEFO came out it would not be surprised.

It could involve itself in the discussions leading up to MYEFO and so fully understand what it would be getting in PEFO.

Swan couldn't do that - this election will be in winter not summer, so he came up with ECONOMIC STATEMENT JULY 2010.

I reckon that's why.

(The same logic applies to costing policies. You can bet Treasury and Finance will have costed all their election policy announcements before the election is called so they are not surprised by what is independent costing finds - the opposition has no such advantage. For it the prospect of a Finance/Treasury independent costing during the campaign is frightening, with the "blunder" headlines that will result if it comes up with a different answer to their's - which is why in the last election Rudd and Swan's tax policy was a carbon copy of the Coalition's which had already been costed by Treasury.)

Economic Statement July 2010

ANZ ANZ Australian Federal Budget Update 2010-11

Commsec Economic Statement July 2010

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