From Fairfax:
Speaking on Adelaide radio station 5AA on Tuesday, Mr Hockey was also keen to keep consumer sentiment buoyant before Christmas, ruling out any immediate savage cuts to the budget in a bid to tackle the widening deficit.
The Treasurer has put Labor on notice saying the opposition will need to eventually help the government address the deficit, if it is serious about restoring the budget to surplus.
Mr Hockey’s warning coincides with the release of a private forecast, which says reduced commodity prices, combined with the Senate’s decision to block key government measures, have blown a $51 billion hole in the budget.The Treasurer did not deny the figure when asked about it on Adelaide Radio station 5AA on Tuesday.
“Iron ore prices are between 30-40 per cent less than they were when we first made our forecasts in the budget, that has a direct impact on our budget bottom line, there is no doubt about that,” Mr Hockey said.
…”I am very focused on maintaining economic momentum in Australia in the Christmas period and beyond [so] we are not going to turn our mid-year budget into a mini-budget, we are not going to go down the path of trying to make up lost ground immediately,” he said.
Very big deficits far into the future then. What iron ore forecast the Treasury uses in December will be fascinating, especially since BREE is buggered. If it gets serious then the write downs will be enormous.
It appears the Treasurer has learned all of the wrong lessons from his failed Budget. It was appropriately conservative – the latest update actually has it $3 billion ahead of forecast – but the cuts were all in the wrong places.
If Hockey is going to get wishy washy now to protect retailers over Christmas then who is he going to protect from cuts next year? The austerity still needs to come or the AAA sovereign rating is toast and Australia’s economic model will begin a great unraveling.
Senior bank executives should bring forward retirement plans for ahead of the next global shock.
