Big budget cuts coming by 2023

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Joe Hockey gave another of his end of entitlement speeches today, which isn’t really worth repeating but this line is, from the AFR:

…”the structural position of our budget is unsustainable…We now find we are not able to finance projected growth in government spending from our existing tax base…This means that, in the absence of significant fiscal adjustment, public debt will continue to grow and the government’s flexibility to respond to future economic shocks will continue to erode’’.

He said the “key focus” May 13 would be to lay a path back to surpluses equivalent to 1 per cent of GDP by 2023-24.

“To a large extent, the budget that we inherited from the previous government reflects the entitlement mentality that has dominated government decision-making over recent years,’’ he said.

This is good stuff even if it’s a lie. Entitlement fell under the previous Labour Government:

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But there’s still plenty to cut. One wonders, though, why we have to wait until 2023. I agree with the need to avoid austerity for the next few years as the post mining adjustment transpires but 2023 might as well be a century away. It’s all a little theatrical.

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.