MYEFO budget blues worsen.
Yesterday the Treasurer released a Mid-Year Economic and Fiscal Outlook (MYEFO) which paints a dismal picture with a budget deficit of $40 billion.
In the May Budget this deficit was predicted to be $29.8 billion, so we have seen a $10 billion blowout in just seven months. The budget surplus promised before the last election is now on delay until the 2019-2020 financial year. But the Treasurer Mr Hockey has put a positive spin on this outlook, stating, “There is more work to be done, but we are on the right track” and that “The Government has made considerable progress. The majority of Budget measures have now been implemented. As a result, the budget position is fundamentally stronger than it would have been under the unsustainable trajectory of debt and deficits left behind by the former Government”.
Read more at Budget.gov.au
However, the detail is anything but reassuring. A collapse in resource prices – including those of iron ore, coal and wheat – coupled with lower wages – have led to significantly lower tax receipts. Unemployment is increasing and economic confidence has bottomed. The Government’s inability to get its budget legislation through the Senate has been largely due to a perception that the proposed cuts in education and social services unfairly target the more vulnerable, namely students, the elderly and those on welfare. Difficulties negotiating with an unruly crossbench have only exacerbated the lack of support.
An extra $3.7 billion cut to foreign aid may help shore up the deficit to a degree, but it won’t fill the $10 billion slide any time soon. Meanwhile cuts to education, welfare and Newstart sit waiting to be reactivated when the Senate resumes in 2015.
Read the ABC’s coverage.
Higher costs of living are a concern for all, but those on a fixed income suffer the most when household prices increase. So let’s not forget that a cut to the indexation of the Age Pension is still waiting in the wings as the Treasurer tries to juggle the nation’s books.
Yesterday’s delivery of the MYEFO was a predictable exercise in the budget blame game. Take one treasurer, mix with declining revenue due to a worsening in our terms of trade, stir in a dash of hyperbole and there you have it. “The previous mob left us with a God-awful mess, only our side can fix it, but the numbers are heading south faster than Speed Gordon, so hang in there for further cuts.” And so Mr Hockey told us that Mr Swan, as treasurer, could not add up, when Mr Swan was telling us that the declining terms of trade were the problem. Now Mr Hockey is telling us collapse in iron ore prices in particular is responsible for his government’s inability to balance the books on time – oh, and of course, the recalcitrance of the other mob in the Senate.
So despite claims that ‘grownups’ are back in government, the same old sniping continues. But rather than become cynical, perhaps it’s time we encouraged our politicians to stop the spin – and the inter-party slanging matches – and come clean about their limited ability to affect a global price for our commodities. If we can face up to this obvious truth, then perhaps we can look more closely at the things our politicians can control and that is taxation and superannuation breaks for the wealthy. These two levers are sitting there, waiting to be pulled. So come 2015 let’s encourage all parties to start an adult debate about the many ways our Federal Government can increase revenue without picking on the poor.
What do you think? Is a bi-partisan approach required to help fix our budget deficit? Is it time to accept that a surplus isn’t the most important thing to our nations economic future? Do those who ultimately find themselves in the role of Treasurer actually have the economic experience and qualifications to manage our country’s finances?
Join YOURLifeChoices, it’s free
- Receive our daily enewsletter
- Enter competitions
- Comment on articles