09-November-2010
Portfolio Media Releases, The Economy
The Gillard Government has failed to take a single tough decision in today’s Mid Year Economic and Fiscal Outlook to get the Budget back into the black as soon as possible.
As a result, since the election campaign, net debt in 2011-12 will be $5 billion higher at $94.4 billion next year.
And the budget bottom line has deteriorated over the forward estimates with next year’s deficit to be $1.9 billion higher and lower surpluses projected in subsequent years.
The Budget balance has deteriorated and debt is higher even though the economy is predicted to be stronger.
This raises serious questions about Labor’s promise to bring the budget back to surplus in 2012-13.
We have an economy nearing capacity, among the highest interest rates in the developed world and rising inflation, yet this government continues to spend and borrow at recession-like levels.
The meager savings and program delays outlined today are not new and were flagged during the election campaign.
The government claims it has offset all new spending, including commitments made during the election and after the election. This is not true. Since the pre-election update spending has exceeded savings by $142 million.
These realities have been put in the too hard basket and deferred until the Budget next year.
This is a government that simply doesn’t get it. It talks about the importance of off-setting the cost of new commitments, but ignores all the reckless spending and borrowing that is already in the pipeline.
Penny Wong as Finance Minister has failed her first test by ignoring Coalition calls for a mini-budget.
Instead of using this an opportunity to rein in spending and borrowing, Labor is simply sitting back and hoping for the best.
While the RBA has its foot on the brake the Gillard government’s foot remains planted firmly on the accelerator.
It is extraordinary how Mr Swan and Senator Wong have been blaming the high exchange rate for hits to revenue, when everybody, except them evidently, could see that the dollar was on the march.
MYEFO is based on an exchange rate 98.5 cents, when the RBA is predicting parity for the next three years.
This government has proved incapable of taking the tough decisions. It has missed a golden opportunity to do some heavy lifting to help restore the economic resilience Labor inherited and to ease pressure from families and small businesses.
Labor cannot manage money. Bringing the Budget back into surplus will take courage, but Labor lacks courage. It continues to spend beyond its means when it should be making the tough decisions.
Media contacts: Nigel Blunden on 0407 632 931 (Joe Hockey) or Cameron Hill on 0408 239 521 (Andrew Robb)