Budget black hole just keeps growing

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These politicians, who are so keen on referencing consumer confidence, really do know how to destroy it. From the AFR today come new forecasts for a MYEFO black hole that just keeps on growing:

The federal government’s debt is expected to blow out to more than $500 billion, according to Treasurer Joe Hockey, who only two weeks ago indicated debt would peak between $440 billion and $460 billion.

Mr Hockey revealed the new forecast in Parliament on Tuesday as he accused the previous Labor government of leaving Australia ill-prepared for its budget and economic challenges.

…Economists predict the 2013-14 ­deficit will be at least $45 billion, 50 per cent higher than the $30 billion fore­shadowed during the federal election.

…The Parliamentary Budget Office for the first time published research ­showing government spending has out-paced economic growth by 27 per cent over the past decade.

The agency estimates spending has grown by an average of 3.8 per cent a year since 2002-03 led by welfare, social security, health and interest payments. Gross domestic product expanded 3 per cent over the same period.

…“It’s long been the case that the ­bodies buried in Canberra are on the spending side, not the revenue side,” Mr Richardson said.

He said the figures showed spending growth was fastest under the former Coalition government led by John Howard and continued under Labor as the economy turned down.

We blew the boom, we kicked the can, and now we’ll boot it a little less far.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.