From The Australian:
TREASURY has warned Joe Hockey of an $18 billion spending burden that will destroy his plan for a “path to surplus” unless drastic action is taken in May to overhaul the federal budget.
…Updating its estimates before the budget, Treasury calculates that the additional spending amounts to about 1 per cent of GDP, or roughly $18bn, on top of outlays in the previous year.
The sharp rise is mostly the result of Labor’s decisions in government to increase spending on foreign aid, education, hospitals and the National Disability Insurance Scheme. Mr Hockey would not confirm the $18bn estimate revealed to The Australian but acknowledged the problem and blamed Labor for “loading up” spending beyond the estimates.
…The Australian’s analysis of Treasury projections shows tax revenue will not rise strongly enough in 2017-18 to cope with the spike in spending.
Budget savings of at least $10bn a year will be needed to stop the deficit blowing out that year.
While the deficit is forecast to narrow to $17.7bn in 2016-17, it would swell to at least $28bn in 2017-18 if no cuts were made.
…Deloitte Access Economics partner Chris Richardson said: “Governments always hide nasties in a cupboard beyond the four years for which they give detailed estimates.
This is one of those articles from The Australian that has an element of truth that comes with lashing of bias. Labor did, in a sense, booby-trap the budget with its late stage spending commitments.
But the Libs have also committed to new spending in the $5 billion parental leave scheme and its huge military promises. It has also slashed its own revenue in trashing the mining and carbon taxes.
The question that should be being asked is what should the nation’s spending priorities be? But instead we get this political dance from the pollies and media as they twist around the May pole of surplus and who’s the better economic manager.
