From Fairfax:
Treasurer Joe Hockey has warned Australians he may be forced to take “emergency action” and deliver Queensland-style austerity if structural budget reforms are not made.
On ABC local radio…in Brisbane:
“What we are now at is the point where we are building the structural changes in the budget such as the copayment in Medicare, such as the higher education changes and some of the welfare changes,” he said.
“Those structural reforms ensure that we have a trajectory on debt that is $300 billion less than what it would be if we went about business as usual.
“Either we make the decisions now or you end up doing what [Premier] Campbell Newman and [Treasurer] Tim Nicholls have had to do in Queensland, and that is take emergency action in order to address the problem you inherit.
”I am warning the people of Australia that if we do not take action now we are going to end up paying up $3 billion a month in interest alone.”
Hockey is right. Big cuts are needed or the sovereign rating will be stripped when the next external shock hits an that will lead to a deflationary cycle of more expensive credit as the banks are also downgraded.
If the Government compromises enough to make the Budget fair, and adds more cuts where they’re needed to make up the difference, then the senate should get out of the way.
Of course, if he does take the path of emergency austerity then you can expect the economy to be under enough strain that he misses his own budget repair targets.
