I'm going to give away a few trade secrets in this week's column. The federal budget papers are up to a thousand pages in length, but if you know what you're looking for, you can get through them in about 20 minutes.
For the region, this is what I'm going to be looking for when Treasurer Josh Frydenberg hands down his budget on Tuesday evening.
How much do we owe?
The COVID-19 economic response measures implemented by the federal government last year were huge! Think JobKeeper, think JobSeeker. On Tuesday we will discover what they cost us and how much our kids will be paying off for the rest of their lives - because the government debt figure will be massive.
Have they fudged it?
The second thing I'm going to be looking for is how credible the government's Gross Domestic Product (GDP) growth forecasts and unemployment forecast numbers are. A budget deficit is nothing more than your expected cash payments over cash receipts.
One way of fudging budget numbers is to pretend that government cash receipts are going to be huge. This can be done by pretending that economic growth is going to be very high, and unemployment very low. This would mean that the government will receive high company tax and income tax receipts.
It's an unusual year because COVID caused GDP to plummet and then appear to recover massively.
It's an unusual year because COVID caused GDP to plummet and then appear to recover massively. I'm going to be guided by the economic forecasts that independent forecasting agencies like the Organisation of Economic Cooperation and Development (OECD) and International Monetary Fund (IMF) have made for Australia.
Both the IMF and OECD are projecting growth of 4.5 per cent in 2021 for Australia. The OECD is also forecasting economic growth of 3.1 per cent for 2022.
If the government's forecasts are wildly different from those figures, then I would think that the forecasts have been fudged. Let's hope for an honest and clean budget.
What will the Illawarra get?
If you've been following me over the years, you will know that on budget night I pick out the biggest spending new policies - usually budget measures that the government has committed to spend more than $1 billion on. I then have a go at estimating what the region's share will be, on each of those new initiatives. I don't waste time with measures worth less than $1 billion because, let's face it, a billion dollars spread over a population of 25 million amounts to $40 per person. That is absolute peanuts if you're trying to solve a serious economic problem.
Like any year, there are likely to be only five or six measures that make it into the billions. They are the ones I'm going to be looking at closely. All the rest is fluff.
Like most years, I suspect all the big budget measures have already been leaked. What the budget papers will do however, is provide us with significant detail on the measures and give us an indication on how much money the government is putting into each measure.
What we know so far is that the following measures will be introduced: $10 billion for aged care; $1.2 billion to boost the digital economy; $1.7 billion into childcare services; and further tax cuts worth $4 billion.
The devil will be in the detail though. I will be looking at how they propose to do it, and whether the measures are truly new or just reaffirming pledges from previous budgets.
Who is needy in the Illawarra?
The Illawarra is sailing really well actually, when you look at the only hard data that we have available for the region, in economic terms - unemployment numbers, building approval numbers and real estate prices.
At the moment, unemployment in the region is sailing along at about 5 per cent, building approvals are growing steadily at about 5 per cent and real estate prices are rocketing up at about 2 per cent per month. All of this paints a picture of a very healthy regional economy.
However, we have about 165,000 workers in the region who could use a tax break, we have about 52,000 people aged over 65 who are either retirees or pensioners and who could use a little bit of help with the escalating cost of living, and we have almost 20,000 children under the age of five with busy parents who could use some childcare support to help their busy lives.
It will be interesting to see on Tuesday night how much money is likely to flow to these groups in the Illawarra region. See you on the other side!
- Alex Frino is Professor of Economics and Deputy Vice-Chancellor (Global Strategy) at the University of Wollongong. He will be reviewing the budget for the Mercury next week.