"If neither political party has the fortitude to press for the Henry Review panel's recipe for reform of Australia's terminally ill revenue regime, politicians of all stripes are likely to prove to be as delusional as Irving Fisher when he was faced with a real depression."

Contrary to what the author implies, there has been no lack of federal revenue growth in Labor's six-year term. The problem has been the irresponsible over-spending by the Government. The forecast federal revenue receipts as a percentage of GDP for 2013-14 of 23.6% is the highest for the six-year term. Annual receipts less payments as a percentage of GDP have averaged minus 2.5% for the six years.

The fact that the federal budget has gone so wrong in just three months from its release in May suggests a lack of integrity by those who authored it. The deficit for 2013-14 is now projected to be $30 billion or 1.9% of GDP. This is a lift in the forecast deficit of about $12 billion. The original forecast deficit was wrong by a whopping 60%.

Rather than spending 105% of tax receipts the Government now proposes to spend 110% of tax receipts, and this excludes accounting for the NBN.

"Would it be too churlish to think that's about the biggest political change we can expect "going forward" as they say?"

Not at all, that about sums it up. I don't blame the politicians, they're simply a reflection of the voters wishes. The worst outcome will be that either the ALP or the LNP will win and yet voters will insist on it.

http://business.financialpost.com/2013/06/13/australia-is-a-leveraged-time-bomb-waiting-to-blow-socgen/

"We repeat the prognosis we gave this time last year that Australia is a leveraged time bomb waiting to blow. It is not a CDO, but a CDO squared. All we have in Australia is, at its simplest, a credit bubble built upon a commodity boom dependent for its sustenance on an even greater credit bubble in China. Yet even with Australia having enjoyed a commodity export boom it still managed to rack up a current account deficit of 4% of GDP last year! Australians have been living beyond their very ample means for a long, long time. Of all the economic bubbles I have seen over the last 30 years in this industry, this one is even more obvious than the rather prominent nose on my increasingly haggard face. And its ultimate fate is obvious to me too."