Are Tony Abbott and his Treasurer, Joe Hockey, being cruel to be kind? The question arises because in these pages last month I argued that, despite the budget being in deficit and likely to remain so throughout the forecast period, it is an extremely deflationary budget and its impact will be to reduce the income-expenditure stream by $50 billion or 3.2 per cent of gross domestic produce in 2014-15.

Such a reduction makes sense only in the context of high inflationary expectations and the prospect of a wages breakout due to strong demand for labour. The budget papers forecast a drift up in unemployment from the present level of 6 per cent, and no fall until 2017-18, to a projected 5.75 per cent.

The government’s obsession is with managing what it calls Labor’s ‘‘debt and deficit crisis’’, which can be summarised as net debt of 12 per cent of GDP with an annual interest expense of 0.7 per cent of GDP.

It is a reasonable inference that this is a manufactured crisis, but is it a case of being cruel to be kind?

The burden of debt is obviously bunkum. But just as the budget has implications for income distribution, it also has implications for resource allocation, productivity and sustainable growth.