Treasure Joe Hockey appeared on ABC’s Insiders yesterday and played-down the prospect of the Budget returning to surplus:
JOE HOCKEY: We have consistently said Barrie that we want to have structural reform that helps to deliver a surplus as soon as possible…
BARRIE CASSIDY: But in the budget itself, will you be any more precise than that in terms of talking about a return to surplus, or will that be the language you use – as soon as possible?
JOE HOCKEY: In the budget you’ll see the numbers, you’ll see the numbers…
BARRIE CASSIDY: Will you be putting a date on a return to surplus?
JOE HOCKEY: We never put a date on returning to surplus. We just need to show we have a quality trajectory, a quality trajectory back to surplus and that we are getting the budget under control. Now, you will see that in the budget…
BARRIE CASSIDY: Are you then able to at least assure the electorate there will be smaller deficits over coming years, there will be increasingly smaller deficits?
JOE HOCKEY: That’s what we’re aiming at Barrie, absolutely.
BARRIE CASSIDY: It’s an aim?
JOE HOCKEY: We are consistently aiming at it.
Hockey’s comments are a far cry from the Coalition’s previous blustering over a Budget surplus. As noted in Fairfax today:
Coalition pledges before the 2013 election [said] that it would deliver a surplus in its first year in office and “every year after that”, based on budget numbers at the time.
The Coalition has since backed away from the claim, however, Prime Minister Tony Abbott told a Coalition meeting last month that the budget would be back in balance within five years.
The cold hard truth is that the Coalition’s pledges to return the Budget to balance were never achievable, for reasons explained on this blog two years ago.
Commodity prices and the terms-of-trade were always going to revert back towards their long-run norms, the epic mining investment boom was always going to unwind, and the population was always going to age. Since then, the car manufacturers have also announced that they would exit Australian production by 2017, making the Budget repair task even more difficult.
Unfortunately, the Abbott Government has shown little appetite for arresting the Budget’s slide through genuine reform. It has already avoided tackling the gaping tax expenditures blowing huge holes in the Budget and distorting the economy, such as superannuation concessions, negative gearing and capital gains tax concessions. It’s infrastructure spending decisions, which will affect the nation’s long-term productivity (and therefore tax revenues) have also been questionable, as evident by the East-West Link debacle.
Unless there is a concerted effort to both raise revenue and cut expenditures, as well as boost the economy’s productivity and growth, then achieving a Budget surplus will forever remain a pipe dream for the Coalition.