Stephen Koukoulas

So what the process is that in sort of December, January, February even, the government, the treasury departments and the policy advisors lay out a platform for what they want to achieve broadly.

Obviously, they don't make all the decisions, but they have a list of things that they would like to achieve, including the budget bottom line.

This time around, as we know and as the Treasurer has told us on many times, it's a rapidly moving fee.

So the poor devils in Treasury and in the Treasurer's office and the Department of Finance and everywhere else that's involved will have been rejigging, recalibrating the numbers.

What's the oil price assumption we put in?

What are we going to do about cost of living relief?

You have the RBA hiking interest rates sort of thrown into the mix as well.

I think when the budget does come out, there'll be something of a collective sigh of relief.

Yeah, and I think it's always policy versus politics in many ways because over the years gone by, just excluding this particular period where we've got an inflation problem, often it's the case, well, what does it mean for us electorally?

And then, okay, what are the economic consequences for it?

So in many ways, other than a few exceptions, it's the wrong way around.

But again, as we've seen with the very, very effective lobbying process

from many lobby groups when they sort of put up a proposal for your mining super profits tax or to scale back franking credits or negative gearing or capital gains tax concessions, these sorts of things, you get a very loud chorus of people, usually a very small minority, but very, very noisy, angling against it.

And that creates a problem for the government in terms of politics.

So this time around, I think they'll be sort of saying, well, you know, we do know that there isn't

an element, whether it's a big or a medium-sized element of truth in the fact that government spending is adding to growth, adding to demand, and the Reserve Banks, on the other hand, trying to sort of squeeze growth and squeeze demand by hiking interest rates.

So they would be well aware of that.

So what comes out tomorrow night, you would assume, and given what's been going on, it'll be a tight budget.

The short answer is no.

And I think if you ask most economists who look at these public policy issues and tax policy and the efficiency of these sorts of things, you would say that the reforms that we're speculating about that are probably going to be in there are all a step in the right direction, definitely, but they're only a baby step towards what needs to be a giant leap for taxation policy.