Surplus slashed - where's the updated ETS modelling?

The Treasury's modelling on the ETS was hopelessly optimistic yesterday, but now looks even more shaky as Kevin Rudd has to admit that keeping the budget in surplus will become harder.

Today the Government released its revised economic forecasts, which slashed around $15 billion from the Budget surplus due to a predicted loss of around $40 billion of revenue over four years.

Speaking in Tasmania, Mr Rudd said the Government will do everything possible to maintain a "reasonable" Budget surplus.

"But the global financial crisis represents a real threat and if the global financial crisis continues to deepen these challenges for Australia will become tougher and tougher and tougher," he said.

"That's just the reality."

The reality, of course, is that the tighter the budget becomes, the harder it will be to justify a pointless emissions trading scheme.

Westpac chief economist Bill Evans says it is likely the Budget will slide into deficit in 2009-10 because of the need for more economic stimulus next year.

And when is the ETS due to be introduced? 2010. Labor has a record for economic mismanagement even at the best of times, and it is inevitable that Krudd & Co will be no different. Add to that the significant effect of an ETS, despite what the Treasury says, and you have a recipe for economic disaster.

I look forward to the "revised" Treasury modelling for the ETS - how long do you think I'll have to wait?

Read it here.