The government has done what it had to do. It has kept its budget numbers in the black, in a fiscal exercise driven by the imperative of preserving its political credibility rather than by economic necessity. Many economists could live with a deficit in these uncertain times but politicians no longer can.
Never mind that the surplus is lower than the budget had estimated: $1.1 billion compared with $1.5 billion. Of course in theory that makes achieving it more precarious. But with an election coming up next year and a surplus now totemic for both sides of politics, you can bet that in the May budget, the figures won't have strayed into the red. That's assuming, of course, that there is not an economic collapse — which is not anticipated in the mid-year review despite a difficult international outlook.
And now to the juggling act to make it all add up.
Saul Eslake, chief economist with the Bank of America Merrill Lynch, says the government ''continues to deliver through genuine savings and accounting fiddling''.
The biggest ''fiddle'' is on how big companies will pay their tax. Some $8.3 billion of the $16.4 billion savings over the budget period comes from having large companies move from a quarterly to a monthly system. Wayne Swan argues that this is a desirable reform in itself, but it is a timing change rather than a substantial saving.
There are some genuine and substantial cuts, however. Among those which will grab the attention of voters are the shrinking of the baby bonus (from $5000 to $3000) for second and later children, saving $461 million over three years, and a less generous government contribution to the subsidy it provides to private health insurance (saving $700 million over three years).
Both are justifiable though there will be some gripes. But on the whole the government has avoided risking too much electoral angst by its decisions. With Labor's position improving gradually in the polls, it judges this is no time to inflict real pain on hip pockets.
