It’s official.

The government will have to cobble together a new fiscal strategy by Thursday 3rd July.

There was a fiscal strategy included in the proposed 25/26 Budget but those documents have now been thrown out with the rubbish.

When I was writing Update number 8, I checked the Treasury website to see if the 25/26 Budget was still there because I was curious whether it may mean the government had lodged its mandated fiscal strategy with Treasury.

 As I wrote at the time:

The now abandoned 25/26 Budget did contain an updated fiscal strategy from the Government. We have no idea whether this is the updated fiscal strategy the government is required to lodge with Treasury. There were many who thought the Premier with a copy of a 2030 STRONG PLAN under his arm was just a PR prop for photo ops, but it may be the Premier fulfilling his statutory requirement to make public any revised fiscal strategy. We don’t know for sure.

We do now.

The 25/26 Budget Papers have been binned. They lapsed following the prorogation of Parliament. Anyone with a hard copy has a piece of history (which I do). For those lucky enough to have an autographed copy (I don’t) it could become a collector’s item. Memorabilia of a failed government.

The fiscal strategy didn’t survive the binning.

The old one didn’t comply anyway. Whilst it specified the key fiscal measures against which fiscal policy will be set and assessed, it didn’t specify the objectives and targets for the budget year and the following three financial years, and it certainly didn’t identify how the fiscal objectives and strategic priorities relate to the principles of sound fiscal management, especially when the targets and objective were incapable of being achieved.

Treasury have put the ball firmly back into the government’s court. To come up with another strategy. It will be a busy few days. The deadline looms this week.

There were many who were sceptical whether Treasurer Barnett had the requisite skills for the task of Treasurer. His knowledge of accounting is limited to how to spell the word, especially given his inability to distinguish between an Operating Balance figure and a Cash Surplus figure, the latter being the one needed to stop debt accumulating.

But being a lawyer by trade meant at least he would have a good grasp of the relevant Acts with which a Treasurer needs to comply.

Unfortunately not.

In summary this is what has happened:

The botched Revised Estimates Report (RER) for 24/25 issued in Feb 2025 was unsuitable for Treasury to use as a basis for its PEFO report. Which meant the proposed 25/26 Budget had no status when it was binned following the calling of an early election requested by the Premier. Which in turn meant the government’s fiscal strategy contained in that budget became null and void. Which now means the government has a few days to come up with a replacement strategy to address the problems laid out by Treasury in PEFO.

The government are in the same position as Opposition parties. They too have to come with a fiscal strategy to meet the same challenges.

This is precisely what the Charter of Budget Responsibility Act intended. That voters would have fiscal strategies from each party they could compare before casting their votes.

Unfortunately, pre-polling may well open before fiscal strategies are made public, another example of the Act requiring amendment.

According to recent media reporting, the Labor Party have apparently found a few savings which they have rounded up to make $500 million.

The Labor party intend to make a few savings by scrapping senior public service positions and the Co-Ordinator General’s office in the Department of State Growth and firing consultants without any need for salary earners as cheaper replacements, $8 million savings here, $20 million savings there.

I don’t want to trivialise the savings. It’s the rounding up to get a $500 million total which is the issue.

Another point of relevance is that to stop net debt growing $500 million won’t suffice. It must be five times larger – every year.

To get the problem into perspective PEFO gave a glimpse as to what will be needed. To stop debt growing in one fell swoop, the alternative to finding $2.7 billion in savings is to increase State taxes from the current level $1.8 billion pa to $4.5 billion. That’s a 150 per increase (which Treasury mistakenly calculated as 250 per cent).

That’s the scale of the problem PEFO has identified.

We await plans from all parties including an updated plan from the government to replace the one Treasury just threw in the bin.