Treasury forecasts of Surpluses

As even the most ardent Labourite finds it difficult to argue that tax cuts are not affordable with a $9b surplus (well not with keeping a straight face) they often point to the forceasted surplus for the out years and exclaim that it is going to shrink to $3.5b, so hence tax cuts are not affordable.

Leaving aside for one second the fact that Dr Cullen can make the out year forecast surplus be anything he wants by changing the level of unallocated future expenditure (which is a massive $9.9b slush fund over three years), we should look at whether surpluses turn out larger or smaller than forecast.

Taking the OBERAC, the underlying surplus, I have examined every OBERAC projection and outcomes for the years 2001 – 2010, as reported in the DEFUs and BEFUs since 2000.

In the 2000 BEFU the OBERAC for 2002/03 was forecast as $2.7b. It turned out to be $5.6b.

The 2000 BEFU forecast the 2003/04 OBERAC to be $3.2b. It was $6.6b.

The 2001 BEFU forecast the 2004/05 OBERAC to be $3.6b. It was $8.8b

The 2002 BEFU forecast the 2005/06 OBERAC to be $4.2b. It looks to be $7.0b

So next time a Labourite claims future surpluses will not be large enough for tax cuts, just think yeah right!