Kathy Marks: Australia - land of the great pretenders

Joe Hockey. Photo / Getty Images

Australia has a Budget crisis and a debt that will crush generations to come. Or does it? It depends on who's in government, and how badly they want to save their own skin.

In May 2013, responding to Wayne Swan's final Budget, Tony Abbott proclaimed "a budget emergency". At that point, the Labor Government was forecasting a spending/revenue deficit of A$18 billion ($19.36 billion at today's rates).

In May 2014, Treasurer Joe Hockey unveiled Australia's toughest Budget for decades, declaring it the only way to tackle Labor's "debt and deficit disaster".

In May 2015, as Hockey prepared to deliver a far more restrained and moderate Budget, a deficit of A$45 billion was being forecast. Crisis? Emergency? Certainly not.

What's changed? The Coalition are in government, and they want to stay there. Australians didn't like last year's stiff medicine, and nor did the Senate. So, most of the unpopular measures, such as making people pay to visit a GP, have been ditched.

Now Hockey is saying it's not the actual deficit that counts, but how it stacks up as a proportion of GDP. And on the basis of that figure, 2.5 per cent, Australia is doing rather well - twice as well as Britain, for instance.

What a difference a year makes. The Horsemen of the Apocalypse have halted their charge on Wagga Wagga, and harsh fiscal love is no longer required. Presumably, then, the economy is in much better shape than in 2014?

Actually, no. Iron ore prices have fallen steeply. Unemployment is up. Consumer confidence is fragile. In Sydney, the gap between rich and poor has widened, with people in the poorer suburbs earning on average as little as A$38,637 a year, compared with A$143,112 in well-heeled areas.

Ahead of yesterday's Budget, the Reserve Bank warned that growth in 2015-16 will be slower than predicted.

Last week, the bank cut the official cash rate to an all-time low of 2 per cent - a move which Hockey, bizarrely, welcomed, telling households and businesses: "Now is the time to borrow and invest ... Now is the time to have a go."

The truth is that the economy is sluggish, however the Government dresses it up, and Abbott and Hockey no longer have the political will to address the deficit.

Hockey is more worried about being sacked by Abbott and replaced by Scott "I fixed the boats, now I can fix the economy" Morrison.

Abbott is more worried about being sacked by his own party and replaced by Malcolm Turnbull or Julie "can't seem to put a foot wrong" Bishop. And the Coalition is more worried about following its political soulmates, the Queensland Newman and Victorian Napthine governments, into the wilderness after just one term.

So, in the interests of Hockey, Abbott and the Coalition, let's pretend yesterday's nice, kind Budget was just what Australia needs.