From the ABC, here is the audio of the this morning’s leak that the MYEFO will cut its iron ore forecast to$60. And the text:
CHRIS UHLMANN: But first this morning, the final parliamentary week of a torrid political year is likely to be even more combative in the wake of the Coalition’s Victorian election loss.
And it could be a fruitless one for the Government, with confusion over what bits of its unfinished Senate business will be settled.
It’s also under pressure over Defence pay rates, but argues repairing the budget means it has no choice but to limit its offer to serving men and women.
But as proof that bad news comes in legions, a report out today by Deloitte Access Economics says budget deficits are going to get worse by $35 billion over the next four years.
And this morning, a senior Coalition source has told AM the figures will be even worse than Deloitte says.
For more, I’m joined by political reporter, James Glenday and James, how much worse?
JAMES GLENDAY: Well, $2-3 billion a year worse. Now, that’s based on information we’ve received this morning about the iron ore price.
A senior government source has told us the iron ore price is going to be written down to around $60 a tonne in the mid-year update. That’s roughly 40 per cent lower than in the budget.
Now, I got Chris Richardson from Deloitte Access Economics to quickly work out what that would mean in terms of revenue write downs in the mid year update.
CHRIS RICHARSON: That would carve about an extra $3 billion a year out of the budget. Two billion this year and rising to 3 billion each year thereafter.
We have the economy across the current four years, scraping about an extra $25 billion out of the budget outlook; that would raise it to about $36 billion over those four years.
JAMES GLENDAY: So that’s just revenue; now when Chris Richardson factors in policy promises too, he’s found the budget bottom line could be roughly $47 billion worse off in total over the next four years.
CHRIS UHLMANN: So James, there’s been speculation about fresh cuts in the mid-year budget update, but that doesn’t seem likely now, does it?
JAMES GLENDAY: No, this same source says that the Abbott government is and I quote “determined Australians will have a good Christmas” and there will be no new cuts or tax increases in the mid-year budget.
Essentially it’s not a mini budget, and senior ministers, particularly in the finance and treasury portfolios have hinted at this before.
This source also expressed extreme frustration at the Opposition this morning for not understanding that the budget bottom line needs repair, but of course, massive revenue write downs in iron ore in particular was a problem faced by Wayne Swan in the former government and at the time, the Coalition ridiculed Labor for their forecasts.
CHRIS UHLMANN: Thanks James and have a good Christmas.
