Despite the headlines, the latest set of crown accounts are not as bad as some are saying.
This is because the important figure is the one called OBEGAL, formerly OBERAC. This is the measure of the underlying structural surplus. Dr Cullen uses to refer to this one all the time until it got embarrassingly large and he then tried to revert to 1970s accounting standards by focusing on merely the cash surplus.
The OBEGAL to Jan 2008 was $3.1 billion against a forecast of $3.7 billion. Now that’s somewhat disturbing as normally actual comes in way above forecast, but some of the difference may just be timing issues.
The full year OBEGAL forecast was $6.6 billion. We’ll find out in May what that has been revised to – could possibly drop to the $5 to $6 billion range. This is still definitely high enough to afford tax cuts but ironically quite a bit less than previous years when Cullen said they were not affordable.