Hard time to be a tough guy of economic policy Treasurer Chris Bowen is facing a tough time, writes Laurie Oakes. TREASURER Chris Bowen was pumping iron in the gym this morning after Cabinet gave final approval to his mini-Budget. It fitted the image he's trying to develop as the new tough guy of Australian economic policy. Jim Chalmers, longtime chief of staff to former Treasurer Wayne Swan, understands the problems governments face when they set out to make budget savings. "Every round of savings just gets harder and harder," he wrote in his recently published book Glory Daze. It's a law of budgeting and politics that every save you make in the 2009 Budget is harder than the hardest save you took in 2008. And, as Bowen now knows, every save in an August mini-budget is harder than the hardest saving in the Budget just three months earlier. In May, Swan rejected a Treasury proposal to cut fringe benefit tax concessions for salary-sacrificed cars, judging it would be more trouble than it was worth. Desperate for extra savings in the mini-budget, Bowen adopted the idea and all hell broke loose. But you have to hand it to Bowen and the recycled prime minister. Announcing tax rises and spending cuts as the curtain-raiser to an election campaign is novel. It is also courageous - possibly in the Yes, Minister sense. Viewers of the brilliant British comedy will recall the line from wily department head Sir Humphrey Appleby: "Controversial only means this will lose you votes. Courageous means this will lose you the election. Some federal ministers privately share Sir Humphrey's view. There were arguments in Cabinet's expenditure review committee about whether the government needed to make its top priority a return to surplus in 2016-17. Bowen flexed his gym-toned muscles and put the nervous nellies in their place.That revenue shortfall of $33 billion provided him with an almost irresistible argument, of course. Clearly strong action was needed in the face of such an enormous write-down of receipts, largely from company tax. But the temptation to put politics first is understandable, given that Labor faced an electoral wipe-out until only a few weeks ago and got a reprieve of sorts by changing leaders. Why risk alienating a big section of the electorate again? Even though the big increase in tobacco tax is dressed up as a health measure, its primary purpose as a revenue-raiser is obvious. Smokers are voters. The small levy to insure account holders against the failure of banks or credit unions in the event of another financial shock is eminently justifiable, but it is being portrayed by the government's critics as a slug on battlers. Nevertheless, sticking to the target of getting back in the black in two years is the responsible course. Bowen and Rudd no doubt have in mind Paul Keating's maxim that good policy is good politics. Apart from anything else, setting a date for a return to surplus provides a measure of certainty about economic policy - or it would do, if Treasury's forecasts were believable. Unfortunately, based on what has happened in recent years, that is not the case. In the 2010 Budget, Swan promised a return to surplus by 2013, but the revenue forecasts that was based on crumbled. They kept crumbling every year after that and the surplus kept looking more and more unattainable. Fairly or unfairly, there will be an assumption that Bowen's forecasts are equally unreliable. That makes his task of selling the mini-budget as responsible economic management very difficult. An even bigger problem is that, while the budget is supposed to get to surplus in 2016-17 and close to it in 2015-16, a huge deficit is forecast in the meantime: $30 billion this financial year compared with the $18 billion forecast in the Budget in May. Expect the Opposition to have a field day with that. The justification, though, gives Rudd a chance to go back to what he sees as the great achievement of his first term as PM: the stimulus package that helped shield us from the Global Financial Crisis. Chalmers argues in his book that the government failed to get the credit it deserved for avoiding recession and saving jobs because of Rudd's ousting. He writes: "The dilemma was whether the replacement of Rudd by Julia Gillard meant that she could not properly or fully claim economic achievements that had been attached to Rudd himself." THE Government sees the Australian economy facing new uncertainties with the winding down of the mining boom, a point underlined by the 6.25 per cent unemployment forecast in the mini-budget for the next two years. The strategy is to argue that, just as stimulating the economy to save jobs was appropriate in 2008-09, squeezing it now when jobs might again be at risk would be inappropriate. That is the rationale for allowing a deficit blow-out and delaying imposition of some of the savings. "We protected jobs during the GFC," Rudd will say. We'll protect them during this difficult period. The Coalition argument is simpler, summed up in a text from a former Liberal backroom operator: "I never heard of a focus group where people like new taxes, even if they think it won't affect them. It says to people: 'The government can't manage money'. Laurie Oakes is the Nine Network's political editor. His column appears every Saturday in the Herald Sun.