Bracket creep - Joe Hockey's stated reason for wanting to cut rates - is at a record low.

That's right. The risk of getting a pay rise that would push up your average tax rate is the lowest since the official wage price index began in 1997. In the past year, wages climbed just 2.3 per cent per cent, which is about as close to zero as wage rises get.

Most of us could happily wait years before getting back the tax our very small wage rises will take away.

If it means getting the budget deficit under control this decade, so much the better. But the Treasurer says it's no longer a question of doing either one or the other. Asked which was his highest priority on Monday, he replied: "Both."

According to the Treasurer: "It's not a case of either getting back to surplus or having tax cuts and a bigger deficit, that's just not right."

He can't "sit by and allow bracket creep to cover rising government spending".

But bracket creep isn't covering rising government spending. His own May budget booked $25 billion of bracket creep over the next four years, all of it to be directed to bringing down the deficit.

By saying he can do both, when the deficit isn't projected to return to balance until 2020, he is saying he no longer regards the "budget emergency" as urgent.

There may well be good economic reasons for offering a tax cut he can't afford. There are certainly good political reasons. He might see himself as a Peter Costello, going to repeated elections offering ever-lower rates.

But there's a difference between Hockey's tax cuts and Costello's. Costello could afford them.

Peter Martin is economics editor of The Age.

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