Sometime between now and the end of the year, the Abbott Government is expected to release the Mid Year Economic and Fiscal Outlook, also fondly referred to as MYEFO. December might seem rather late for a ‘mid year’ report, but it in fact refers to the midpoint of the Australian financial year and is an update on the Budget delivered in the previous May.
MYEFO provides an update on the state of the government’s books – whether enough money is being collected through taxation and whether expenditure is under control. It provides governments with the flexibility to respond to a revenue problem by raising taxes or cutting expenditure without having to wait for the next Budget.
It’s all eminently sensible and should be straightforward. But then, nothing in politics is ever straightforward. Then Opposition Leader Tony Abbott made a fuss over the 2011 MYEFO, calling it a ‘crisis mini-budget’ and pushing for parliament to sit an extra week in December to consider it. In 2012 the Gillard Government brought the report forward to October to avoid including data that showed the huge reduction in tax collected from the mining industry. The MYEFO also has the power to affect financial markets and consumer confidence by virtue of it being an official Budget statement.
A recent media report floated the idea of delaying this year’s MYEFO (and the expected bad news contained therein) until January to avoid spooking Christmas shoppers. This was howled down by Labor with reminders of Abbott’s election launch commitment to reveal “the true state of Labor’s books” within 100 days of being elected (by 16 December) and warnings that the delay was hiding huge cuts planned for next year’s budget.
The unfortunate truth is that the best time to release this year’s MYEFO is a nuanced political choice that may be beyond the currently observed limitations of the Abbott Government. Decisions and counter-decisions on matters ranging from Indonesia and Gonski, to the debt ceiling and asylum seekers, suggest a serious shortfall in its political smarts department.