Back to surplus…maybe

With the election in full swing and Abbott officially the underdog the punters need to look carefully at what the ALP are saying. Take Gillard’s and Swan’s plea to be considered a fiscal conservatives. She says; “…….the budget to surplus by 2013” Only if commodity prices keep on going up and there is no indication that that will happen. In fact, at the moment iron ore is going the other way. Swan’s Price gymnastics are headlined at The Business Spectator

It is worth noting that since the May budget iron ore prices have been falling steadily and quite significantly and the swaps market is signalling further deterioration over the coming months. The assumption that the terms of trade will increase 17 per cent this financial year to their highest levels on record is brave. With China’s economy slowing and the outlook for the rest of the world troubled and clouded, any medium-term optimism needs to be treated with some scepticism.

I’ve said before that I’m not an economist but I can read and I can smell a rat. So, every time Julia says we will have the economy in surplus we must conclude – well, maybe but it’s not a tick in a fiscal conservative’s list, it’s just a tick in a ‘wish list’. ….needs to be treated with some scepticism indeed.