It was a beautiful boom. But temporary boom, permanent promises" Chris Richardson on MYEFO challenge

Today's midyear economic update is set to confirm the harsh truth that the financial bonanza from the mining boom is not just fading - but over.

But how well have consecutive governments, both Labor and Coalition, managed expectations that booms eventually end and more often than not become a bust?

The answer is "not so well" according high profile economist Chris Richardson, a former Treasury official and partner at Deloitte Access Economics.

He argues that despite the evidence from Treasurers and regular warnings from the Reserve Bank that the investment phase of the boom was in transition, few people have been listening.

"Ordinary Australians don't get it. Temporary boom, permanent promises," Chris Richardson told RN Breakfast this morning.

"It was a beautiful boom. The biggest beneficiary was never the miners - it was the budget.

"As a nation we took it and we made the oldest mistake - we pretended it was permanent. We spent it on family benefits, baby bonuses and tax cuts.

"Now that boom is gone and we've got to pay for those permanent promises."

Like real estate prices in Sydney and Melbourne which went to the point of becoming a bubble, Chris Richardson says Australians and some politicians were deluded into thinking that prices would keep rising.

Instead, Treasurer Scott Morrison is now playing a game of catching a falling knife as the iron ore price falls from the US$48 a tonne projected in the May budget to today's level of US$37.50.

So given the collapsing revenue from mining, what chance does Chris Richardson see of the budget returning to surplus by 2020?

"Not the faintest hope," Chris Richardson says.

"Look, the Senate could pass everything before it right now. The states could stop arguing the toss over the 2014 cuts that they had and you still wouldn't get close to surplus."

Scott Morrison will be putting his signature on economic forecasts against a backdrop of slowing growth and evidence that the transition away from mining is sluggish.

And while talk of a recession is being discounted, Chris Richardson warns that after around 25 years of unbroken economic expansion a downturn is inevitable.

"At some stage down the track Australia will face a recession. And you want the Treasurer of the day to have sufficient confidence that the budget is good shape and that we use it as a shield to defend against that recession."