MYEFO: You call that a budget improvement? The ratings agencies won't

The ratings agencies won't fall for it, and neither should you.

Treasurer Scott Morrison has revised down tax revenue by $30.7 billion over the next four years in a belated admission he has a revenue problem.

But he says the budget deficits will only deteriorate by $10.4 billion.

We're meant to think the $20 billion difference is the result of cost-control. But it isn't. All up, government measures to make up the difference net out to just $2.5 billion. Over four years, that's a cut in projected spending of 0.13 per cent, barely a rounding error.

Instead it's pulled out the savings from the fiscal equivalent of the back of the couch.

It's discovered that childcare benefits aren't being taken up at the rate expected, so it's lopped $7.6 billion off the amount it expects to pay. It's discovered that pension payments are growing more slowly than expected, so it's lopped off another $2.7 billion. The support for carers program is also costing less than expected, so it's lopped off another $1.9 billion.

All up these "parameter variations," colloquially known as "hollow logs", amount to $12.2 billion. They're handy for making it look as if you're doing something to fight collapsing revenue when you're not doing much.

There's a lot the government could do if was minded to. It could abandon or postpone its largely-unfunded company tax cuts, saving $2.7 billion over the forward estimates, and eventually $8.2 billion per year, it could slash the capital gains tax discount, saving $5.4 billion, it could end negative gearing on newly-purchased assets, saving $2.6 billion, which would grow to something much bigger. They are the type of things the ratings agencies expect from governments just re-elected.

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As it is, it is attributing a big chunk of the improvement in the deficit to bracket creep brought on by an arguably implausible lift in wage growth. Right now, wage growth is just 1.9 per cent, the lowest on record. We are asked to believe it will climb to 2.25 per cent and then to 2.5 per cent. We're not told why.

Even with apparently heroic forecasts and hollow logs, the surplus it is forecasting for 2020-21 is now close to nonexistent. It's $2 billion, around 0.1 per cent of GDP, which isn't enough to convince anyone of anything.