5 May 2016

4 May 2016
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Take a look at Nicki’s Budget analysis here

ELEANOR HALL: Nicki Hutley is chief economist and director at consulting firm Urbis. She has 25 years of economic, financial market and public policy experience, and she was in the budget lockup last night with the rest of us.

She’s with me now in the Canberra studio.

Nicki, first your assessment of this budget, has it changed since you emerged from the lockup last night?

NICKI HUTLEY: No, I’m still going with the title Groundhog Day budget. Look nothing has changed either in my interpretation or in fact in the policy sphere.

There is very little here to get excited about. As we were just discussing, I try to get optimistic, I’m looking for the good in these things, but really there is very little here to get excited about today unfortunately.

ELEANOR HALL: Well the projections for reducing the structural deficit are being pretty widely described as heroic. Do you agree with that?

NICKI HUTLEY: Absolutely. Look, the economic projections are ridiculously optimistic. I think we live in an uncertain world and you have to build on conservative forecasts.

I mean look, there are margins of error here, but I would be going at a much more conservative way. We’ve just got into this habit, and if you look at the chart of where our forecasts are versus where the outcomes are, we basically have entrenched this practise of optimistic economic forecasts to get us closer to surplus in four years time.

And that’s just not good enough, we actually have to have meaningful policy adjustments and as Australians we have to learn what is it we want from policy and then how are we going to pay for it?

Because we can’t have increased expenditure and reduced taxes. Those two things just don’t add up, so what do we want as a nation?

Do we want to invest in education, in social services, in infrastructure – all the good things that we really should be going for, and if so, how are we going to pay for them – because you know somebody has to.

ELEANOR HALL: Interestingly last night or yesterday when we were in the lock up the RBA decision came down.

The Treasurer is insisting that Treasury won’t change the optimistic numbers that you say are in the budget in response to the rates cut decision. Do you think that’s right?

NICKI HUTLEY: Look I think they are a bit hamstrung, but don’t forget we’ll get another statement, a preliminary statement, when the election is announced, so we’ll have to come out with another one and I suspect they will have to tweak – certainly the inflation numbers will have to be tweaked down.

And I really think they should be tweaking down the growth numbers, particularly in the out years. I think they are overly optimistic to have three consecutive years of above trend growth.

ELEANOR HALL: How well do you think the Government has built this narrative of “jobs and growth”?

NICKI HUTLEY: Look it’s hard for me to sail on it because I am an economist nerd who is down in the numbers and deal with this in a very different way than probably the man in the street or the woman in the street.

There is a lot of rhetoric around three word slogans rather than actual meaningful action unfortunately.

And I think for me I don’t see this as a very consistent narrative, I don’t think there is an overarching plan, but I don’t know how that necessary translates and whether those little grabs, the three word slogans are back I see, with you know the jobs and growth.

That to me is there is a lot of rhetoric around that and across this budget, rather than actual meaningful action unfortunately.

ELEANOR HALL: And what about this youth jobs plan we’ve just been discussing it. There’s been some severe criticism of that from the ACTU. Will it work better than work for the dole?

NICKI HUTLEY: Look anything that get kids into training is a good thing. Will it provide long term jobs for disadvantaged and under-skilled kids? I don’t know.

In the past when we have provided subsidised job positions, they have not provided long term jobs, and that’s the evidence of the past.

I hope that’s wrong, I hope that you know, this will be different. Any amount of training is good training to help youth. But whether this actually works or not I think the jury is still very much out on it.

ELEANOR HALL: And Nicki, we are already seeing a focal point of conflict around fairness in this budget. What’s your assessment of it in terms of fairness?

NICKI HUTLEY: Yeah look I don’t think people can complain about the fairness to be honest, I think that’s one thing they actually got right this time. You know they were criticised quite rightly for two years ago for a very unfair budget.

This, you know a lot of the hard work, if you can call it that, is being done at the top end of the market. So – and by smokers, I’m quite happy for them to be taxed as well I think that’s sensible.

My criticism is that it lacks a really significant strategic plan to get us back to surplus over the long term.

There is nothing really in this budget that you can actually get particularly upset about one way or another.

So I don’t see this budget as being one about fairness or not I see it as – it’s more about – my criticism is that it lacks a really significant strategic plan to get us back to surplus over the long term, to deal with Australia’s adjustments from the mining boom towards being a more service, technology, innovation orientated economy, to make sure that we are planning for NDIS, for good education, whether it’s Gonski or new courses in science and technology.

All of that needs to have a really over arching framework. It’s lots of different bits and pieces.

A good policy is about bringing a collaborative, over-arching policy, a coherency to it, that says this is how we are going to go. Not just a three word slogan.

ELEANOR HALL: Nicki Hutley thanks so much for joining us.

NICKI HUTLEY: Thank you.

ELEANOR HALL: That’s Nicki Hutley, the chief economist and director at consulting firm Urbis.

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