Friday, April 19, 2013

Hockey. That surplus promise - ditch it, we're not stupid

More sensible by the minute

The Coalition has abandoned its plan to quickly return the budget to surplus, citing deteriorating government finances.

“It is important to be prudent,” Mr Hockey told a forum organised by The Australian Financial Review on Thursday.

“We are not going to go down the path of austerity simply to bring the budget back to surplus because it would end up being a temporary surplus, depending on how deep the deficit is that we inherit.”

His remarks are a departure from a commitment he made on the ABC’s AM program in January.

“Our commitment is emphatic,” he said then. “Based on the numbers published today we will deliver a surplus in our first year and every year after that.”

Opposition leader Tony Abbott backed him up saying that afternoon: “Based on the published figures we believe we can deliver surpluses in each year of the first term of a Coalition government”.

Since then further evidence has emerged of a deteriorating budget starting point. Figures released Friday showed government revenue in the eight months to February $7 billion behind the official forecast made only four months earlier...

This week’s collapse in the European carbon price has made the official forecasts for Australian carbon tax revenue look untenable after Australia moves to a price linked to Europe’s in 2015. Mining tax revenue is also a fraction of the official forecast.

However it is not clear how much the weaker revenue from those two taxes would hurt the Coalition’s plans as it had been planning to abolish them.

Mr Hockey’s increased caution puts him in apparent agreement with the Treasurer Wayne Swan who signalled a slower return to surplus Thursday saying on arriving for meetings in Washington that “to cut to the bone” would “drive our economy into the ground and send unemployment skywards”.

“This approach will never be acceptable to this government,” he said.

In The Age

Related Posts

. What? No surplus? The morning after

. Graphed. Why the budget is bleeding

. Lower growth, lower rates, no surplus. The GDP washup