If the Government wants to bring in a budget that keeps shifting us back to surplus, then maybe it is time to admit it's not all about cutting spending, but that revenue also needs to be increased, writes Greg Jericho.

When I look at the budget figures I almost feel a certain amount of sympathy for Joe Hockey. For a man who wants to get the budget back to surplus he has a pretty big problem.

The difficulty for him is that he appears willing to only countenance half of the problem and in doing so exacerbates his difficulty by failing to level with the Australian voters.

Last week betwixt all the leadership palaver, the Government let it be known that the path back to a budget surplus would be more difficult than anticipated in either the 2014 budget or last December's MYEFO.

Now, for a man who has put such great store in charting the path back to the surplus, Hockey needed to explain the situation. He told journalists last Thursday that the problem was "we are currently spending $100 million more every day than we are collecting in revenue." He suggested this was "why we need to fix the budget."

Except all his rhetoric is about cutting Government spending rather than noting the revenue side. Indeed he only mentioned the falling revenue in a response to questions on tax cuts. He argued that "we are still absolutely committed to doing that (cutting taxes) but, obviously, we face challenges with the budget, because we've had falling revenue ourselves."

But instead of pointing out that aspect of the problem, he again straight away turned to expenditure saying, "I ask the Labor Party and the Opposition in the Senate to help us deal with the massive growth in expenditure that was a legacy of Labor".

Not surprisingly with this attitude the talk about Government expenditure is the only one being heard by the party faithful.

Former adviser to Nick Minchin, David Miles, for example on last Thursday's episode of The Drum took the position that there was not a revenue problem at all.

Miles suggested that, "if you look at the past history of revenue growth in this country, other than two years which was the GFC period where he did have drops in revenue, after those two years it went back - it returned. And if you have a look at the graph of government revenue over the last 10 years there has been one dip and its returned back to a linear line as though those dips had never occurred."

This suggests Hockey has a pretty serious dilemma. Because if your own side is suggesting there's no revenue problem then you're going to have a tough time explaining it to the voters.

So let me lend the Treasurer a hand. And we'll take Miles' advice and look at some graphs along the way.

Firstly, yes tax revenue is higher now than it was in the last year of the Howard government. But that doesn't tell us much - inflation and the size of the economy in that time makes such a thing inevitable.

Tax revenue is supposed to grow each year. That is why the "dip" where tax revenue fell is so astonishing. It was the first time since WWII that tax revenue fell two years in a row. In the 45 years since 1970, taxation revenue has fallen just three times in nominal terms: 1991-92 and in 2008-09 and 2009-10.

But that dip doesn't just occur and then disappear as if it "never occurred" - it has lasting effects. And this is where the whole problem of a "linear path" comes. Taxation revenue has yet to catch up to where we would have expected had we continued along the same linear path of the 10 years from 1998-2008:

Yes our revenue is growing again along a linear line, but it is akin to two runners racing side by side at a steady pace and then one stops for 10 seconds and then starts running again. She will only catch up if she runs faster than she was before.

And we are not gaining revenue fast than before:

In the 10 years to 2008, revenue grew on average by 7.9 per cent each year in nominal terms and by 4.7 per cent in real terms (account for inflation).

But according the December MYEFO, in the eight years from 2010-11 (when revenue began to rise again), revenue is expected to grow till 2017-18 by just 6.4 per cent each year in nominal terms and 3.8 per cent in real terms.

However, talking in dollar amounts is a bit misleading. Nominal figures ignore inflation and the growing economy and even accounting for inflation is a bit dodgy given we would hope the economy would grow faster than inflation (otherwise real GDP growth would be 0 per cent).

The standard measure of revenue and expenditure is as a percentage of GDP. In the 10 years to 2008 taxation revenue averaged 23.6 per cent of GDP. Since then the highest it has been is the 22 per cent of GDP it was expected to reach in this financial year - but this now seems unlikely.

To suggest that taxation revenue has returned to where it was after a dip during the GFC is complete bollocks.

Yes Hockey has had to deal with revenue write-downs. So too did Wayne Swan. You can blame Treasury for being too optimistic, or blame the Treasurer for trying to get the Treasury to be too optimistic, but either way you can't get passed the fact that Swan and now Hockey are dealing with revenue much lower than John Howard or Peter Costello ever had to contemplate.

Now I know, what about expenditure?

And yes it is higher.

In the 10 years to 2008, government expenditure averaged 24.1 per cent of GDP, since then it has only been down to that level once - in 2012-13 when Wayne Swan massively cut spending (and moved a bit of spending forward into 2011-12):

In the 10 years from 2000-08 out to 2016-17 the estimated cumulative spending the government will have undertaken equals roughly 11.5 per cent of GDP more than what it would have been had spending remained at the average of 24.1 per cent of GDP each year.

That's a hell of a lot of money - about $182 billion in today's money.

But if that sounds like a lot, in the same period the cumulative taxation revenue is estimated to be 20.3 per cent of GDP less than it would have been had the government been collecting that 10 year average of 23.6 per cent of GDP each year.

That works out to about $321 billion over that period.

So sure there may be a spending problem. If you want to get to a surplus there is likely to be some spending to be cut. But if you're only looking at that side of the ledger you're missing a much bigger issue.

If the Government wants to bring in a budget that keeps shifting us back to surplus, then maybe it is time to admit it's not all about cutting spending, but that revenue also needs to be increased - and by much more than small measures like a 1 per cent "debt levy" to the top tax bracket.

Perhaps it is time to consider changes to how superannuation is taxed. After all - the Treasury last month estimated in 2014-15 $27.3 billion in taxation was foregone due to concessional taxation of employer superannuation contributions and entity earnings.

That's about equal to 1.7 per cent of GDP.

But to do that (or even half of that) you need to convince the public that it needs to be done. And that means throwing out the talking points and the tired and now ignored blaming of the ALP.

With 13 weeks to go till the budget, maybe now is the time to start telling voters the whole story, rather than just half.

Greg Jericho writes weekly for The Drum. You can read his blog and he tweets at @grogsgamut.