Surplus promise washed away

Gillard's most solemn promise was always hostage to events:

PRIME Minister Julia Gillard's commitment to return the federal budget to surplus in 2012-13 is coming under more pressure as the likely damage bill from the most devastating series of floods in Australia's recorded history continues to mount.With the still unfolding crisis in Victoria adding to a colossal damage bill in Queensland, Ms Gillard and Treasurer Wayne Swan yesterday conceded that the budget would be stretched by flood recovery and rebuilding costs for years.

Pointedly, when discussing the financial implications of the floods, Ms Gillard did not repeat assurances earlier this month that the promised schedule for a return to budget surplus would be unchanged.

''We will be managing the federal budget so that we can meet the needs of recovery and rebuilding,'' Ms Gillard said…

As Ms Gillard and Mr Swan avoided direct speculation on the surplus timetable, a leading economist discounted their chances of meeting the 2012-13 target. AMP head of investment strategy Shane Oliver cited predictions that flood recovery could cost $20 billion, and noted that for every dollar the states spent on rebuilding, Canberra must pay them back 75¢.

Another broken promise seems almost inevitable. With money so badly needed, it hardly seems the right time to impose a growth-choking "carbon tax" or emissions trading system, either.

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