Why biased budget forecasts make poor politics
- Written by John Daley, Chief Executive Officer, Grattan Institute
For the last eight years, budget outcomes have consistently been much lower than previous budget forecasts. But in each year, the treasurer has again forecast a happy return to balance over the next four years. Over-optimistic forecasts have made it easy for treasurers to avoid making the really tough decisions on budget repair.
Budget outcomes have continued to surprise because of systematic revenue forecast errors by Treasury, which dwarf actual policy changes in explaining changes to the budget bottom line. These are compounded by the wilful blindness of politicians, happy to use these forecasts to justify avoiding difficult decisions.
Authors: John Daley, Chief Executive Officer, Grattan Institute
Read more http://theconversation.com/why-biased-budget-forecasts-make-poor-politics-76945