The mid-year economic and fiscal outlook (Myefo) released yesterday was a case of the karma police arresting Joe Hockey and reading him his rights. The Myefo revealed a large write down in taxation revenue which saw the budget deficit for 2014-15 increase by $10.6bn – from $29.8bn to now, $40.3bn. Revenue problems were a habitual concern for Wayne Swan while treasurer. But during that time, Hockey never gave him any of the sympathy he now believes he is entitled.

While this year sees a $10.6bn larger deficit, the following three years are just as bad.

In 2015-16 the deficit is $14.16bn larger than forecast in the May budget, it’s $10.3bn bigger in 2016-17, and $8.6bn greater in 2017-18. All up it comes to a total increase of $43.7bn in cumulative deficits over the next four years.

Not only is it worse than was predicted in May, it is worse than was predicted in last year’s Myefo – which saw Joe Hockey trying his very best to make the situation look as bad as possible in order to lay the blame of the deficits on the ALP:

Most of the blowout in the surplus is due to “parameter changes” – essentially downgrades in economic forecasts such as level of employment growth and the drop in our terms of trade.

In May, employment was forecast to grow by 1.5% this year, now it is expected to only increase by 1%; similarly the unemployment rate is now predicted to reach 6.5% by June next year, rather than 6.25%:

The big difference is the terms of trade. In May it was expected to fall by 6.75% – already a significant drop – now, however, it is set to fall by 13.5%.

Altogether these have led to taxation revenue for this year predicted to be 1.9% below what was anticipated in May and 2.3% below what was expected for 2015-16:

The biggest falls are in individual income tax – down $2.7bn in both this year and the next – and company tax. Company tax falls $2.64bn this year, but next year is forecast to be 6.1% below what was expected in May – $4.6bn less than expected.

Admittedly, such falls were largely unanticipated. Some may have thought the 6.25% drop in the terms of trade was too optimistic, but few people would have been predicting the iron ore price would now be half what it was a year ago.

But while the terms of trade fall of 13.5% in this financial year is the biggest since records began being kept in 1959, in 2012-13 it fell then by a record 10% and, rather than acknowledge those difficulties, Joe Hockey was rather quick to blame the government.

Before the 2013 budget, he and Tony Abbott issued a media release suggesting that they wanted “to see credible and achievable forecasts. Australia can’t afford another year of Labor ‘cooking the books’ and the inevitable blowout that follows”.

Yeah, blowouts are bad...

They noted that instead of a promised surplus in 2012-13 “there was a $21bn blowout and in the year before there was a $7bn blowout”. That made for $28bn in cumulative “deficit “blowouts”– only slightly worse than the predicted $25bn blowout expected over this year and the next.

They also wheeled out their favourite line that “Labor has a spending problem, not a revenue problem”.

To support this they noted that revenue was “expected to be over $70bn higher than at the end of the Howard government, and with budget data for the first seven months of this financial year showing revenues up by almost five per cent relative to the same period in the previous financial year”.

So it must be a shock for Hockey to find that not only is revenue this year expected to be $84bn “higher than at the end of the Howard government” and higher than Labor, it is also expected to grow over the next four years by an average of 6.3% each year.

Of course nominal dollar terms can be misleading, but at no stage over the next four years is total government revenue ever expected to be lower than the 23.3% of GDP that was the high water mark under the Rudd and Gillard governments:

Tony Abbott and Joe Hockey also noted that the ALP government was “spending almost $100bn a year more than in the last year of the Howard government”.

So it must be embarrassing for them both to find that this year they will spend almost $145bn “a year more than in the last year of the Howard government”, and that this financial year sees expenditure a mere 0.1% of GDP below the 26% of GDP that occurred in 2009-10 when the Rudd government responded to the GFC with a massive stimulus:

The Myefo does anticipate expenditure to grow at well below average levels over the next four years, but it also expects the budget to be back into surplus by 2019-20. Given in 2013‑14 it was in deficit of 3.1% of GDP, that six-year turnaround would be an improvement in the budget position not seen since the last six years of the 1990s.

That’s a big ask given that from 1994-2000 Australia’s economy grew by an average of 4.2% each year, compared to the average of 3.1% predicted for the next four years.

Clearly comparing the budget revenue and expenditure as Joe Hockey and Tony Abbott did while they were in opposition is utterly moronic. Nominal figures ignore inflation and growth of the population and the economy itself.

It is apt that their words should come back to haunt them. But it would be in all our interests, given the challenges that approach the government and our economy, from the ageing population to the end of the mining boom, if our treasurer would now adopt a more intelligent rhetoric.

It would also be good if the current shadow treasurer, Chris Bowen, did not ape Hockey’s words. But given the tack Hockey and Abbott have taken for the last five years, I would not be surprised if he doesn’t.