Joe Hockey's Intergenerational Report is all about the case for Budget cuts

Federal Treasurer Joe Hockey. Photo: Getty Images

The Treasurer’s inter-generational report (IGR), released this morning, tries to estimate what Australia might look like economically and demographically over the next 40 years.

It’s also the report that estimates what the Federal Government’s financial situation is going to look like in 40 years time.

While the report takes a look out beyond the horizon it is this latter point which is important because it has implications for the Budget the government will deliver in just two months.

That’s because the Government has framed the charts in the IGR as a negative proposition. That is, if we stuck with Labor’s policy settings we’ll all be ruined.

And it argues that if the Senate won’t pass the rest of our agenda and pass our policies, we’ll be ruined almost as much as if Labour policies are left in place.

But what the IGR tries to say is that if all the Government’s tough budget policies are implemented, we’ll be okay. Just.

Here’s an example of one of the charts:

Pretty much the entire document is framed in this manner as the government makes the case that its legislative agenda should still be passed.

Cherelle Murphy, Senior Economist at the ANZ, in a note to clients this afternoon says the IGR “makes the case for an implementation of the 2014-15 budget measures proposed by the Government – or polices that have the equivalent impact on spending and revenue.”

For the non-economists that means that savings for some of the measures which have been jettisoned as unpopular need to be found elsewhere. Which also means it is going to be hard for the Prime Minister to deliver on some of his more voter friendly promises made recently in the wake of Abbott’s “near-death experience” with the attempted leadership spill.

The 2015-16 budget is going to be very interesting.

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