Budget humiliation for Joe Hockey

Tue, 02 Sep 2014  |  

When he was Shadow Treasurer, Joe Hockey promised that "we will achieve a surplus in our first year in office and we will achieve a surplus for every year of our first term.''

Well, a couple of years on including one where Mr Hockey has been running Treasury and fiscal policy, it seems humiliation or capitulation are the order of the day for the world's most complacent Treasurer.

Here's why.

The budget numbers presented in the Pre-Election Fiscal Outlook in August 2013 – that's right, the ones prepared without any involvement from politicians, were as follows. The numbers are the forecasts for the fiscal balance:

2013-14    -$30.1 billion
2014-15    -$24.0 billion
2015-16     -$4.7 billion
2016-17     +$4.0 billion

The cumulative position of the budget was a deficit of $54.8 billion, and there was a budget surplus forecast for 2016-17.

When Mr Hockey delivered his budget in May, those bottom line numbers had changed to the following:

2013-14    -$49.9 billion
2014-15    -$29.8 billion
2015-16    -$17.1 billion
2016-17    -$10.6 billion

The cumulative position was a deficit of $107.3 billion, double the deficit inherited from the previous government and that included the raft of policy measures designed to cut spending and hike taxes. There was no surplus in the forward estimates.

Since the budget in May, things on the budget bottom line have undoubtedly got worse. The government has floundered to get its measures through the Senate and just a short while ago, it had to capitulate to the Palmer United Party over the repeal of the mining tax. That humiliation for the government alone has added a further $6.5 billion to the cumulative budget deficit (10,000 times the revenue raised from the mining tax in the most recent quarter), making a mockery of the budget deficit and government debt propaganda peddled by the Coalition parties.

Budget policy under this government is floundering. They are not delivering. The deficits are getting larger even though they gave commitment after commitment to return to surplus and eliminate government debt.

They are failing dismally and unfortunately, Australia will be worse for it. Let's just hope the credit ratings agencies haven't noticed how poor the policy settings actually are.

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