(A structural deficit, by the way, is an economist's estimate of what the deficit would be were it not for unusual circumstances, such as abnormally high minerals prices. Since it is unclear what is normal for minerals prices, such estimates are entirely subjective, and differ from one economist to another. 'You do the sums. Which is the bigger problem: revenue or spending?' Credit:Greg McKenzie (And a ''black hole'', for those who have forgotten, is an area in space whose gravitational pull is so strong that it swallows up everything within reach, preventing anything, even light, from escaping. The next person to use this as a cliche for a budget deficit is required to explain why he or she thinks it is impossible to escape from a budget deficit.) Some of our media brethren are also convinced that it's all due to excessive spending by the Labor government. They hush up any signs that a slump in government revenue might be the bigger problem. So what does the data tell us? In the last eight years of the Howard government, cash revenues averaged 25.4 per cent of GDP while spending was 24.2 per cent. Result? Budget surpluses averaging 1.2 per cent of GDP.

In 2012-13, revenue will be roughly 23.2 per cent of GDP. Underlying spending, after adjusting for last year's budget fiddles (which shifted $9 billion of spending into 2011-12), will be roughly 24.5 per cent of GDP. You do the sums. Which is the bigger problem: revenue or spending? The gap was meant to close in 2012-13. Revenue was forecast to swell 11.8 per cent, mostly from company tax and the mining tax, while spending, thanks to the fiddles and ''efficiency dividends'', was meant to shrink 2 per cent. It hasn't worked out like that. Spending in the eight months to February was up 1.8 per cent year on year, but Finance Minister Penny Wong insists it will end up on target. But revenue has risen only 4.5 per cent year on year. For the three months to February, tax revenue was 0.5 per cent less than it was a year earlier. Why? We've been told again and again, but some don't want to hear. Mining companies, which have been doing well, have been quite legitimately reducing tax by writing off the record $285 billion they invested here over the past decade. And the mining tax was so poorly designed that it has raised virtually nothing, and might not for years.

Apart from the banks, the rest of the economy has not done well, mainly due to the overvalued dollar, so it's not paying that much tax. Company tax was meant to reap an extra $6 billion this year, but in the first eight months, its take rose just $381 million, less than 1 per cent. But the government spends too much, you say. Well, all of us can think of areas where we think it should cut spending. Equally, we can all think of areas where it should spend more. The International Monetary Fund estimates that, excluding east Asian countries where welfare is left to the family, Australia already has the second lowest spending of any Western country, behind only Switzerland. We will have to spend more in future, as our population ages, and millions of baby boomers are supported by taxpayers for healthcare, age pensions and nursing homes, while paying little or no tax. We will have to spend more, one way or other, if we are to get the transport infrastructure we want. Where the Gillard government has been financially reckless is in pretending that our current tax base can support our current spending, the looming increases in spending on the aged, the billions required for the Gonski reforms to school spending and the national disability insurance scheme. As I said last week, something's got to give. We cannot support this level of spending with this level of revenue. Whether you support deep spending cuts or serious tax rises, or a combination of both, is a matter of political preference. My preference is to look for both.

One final point. In the end, it's not the deficit that matters, it's the economy. Britain's new Tory government put its economy into recession by trying to get rid of a budget deficit. We hope the Coalition has learnt from that mistake, but we can't know until it lays out what it would do. Loading Tim Colebatch is The Age's economics editor. Follow the National Times on Twitter