Joe Hockey to unveil Labor's $47 billion 'disaster'

[nero_bolt]

Joe Hockey to unveil Labor's $47 billion 'disaster': Australia is facing a decade of deficits 

THE federal government will post a $47 billion deficit tomorrow and warn of a further decade of deficits when it exposes the full scale of the "fiscal disaster" it claims has been left by Labor.

So "disastrous" are the numbers that Treasurer Joe Hockey is expected to warn that, without a dramatic realignment of public sector spending and revenue through improved economic growth, the nation will face deficits for the next 10 years, government sources have confirmed.

LABOR'S $1,2 BILLION BOMB

The Daily Telegraph yesterday learnt that the Mid-Year Economic and Fiscal Outlook (MYEFO), to be released tomorrow, will reveal a further $17 billion deterioration in this year's financial position since Labor's economic statement in August of a $30.1 billion black hole.

It will also show the collapse in revenues of about $1 billion a week since the Gillard government's May budget - which forecast a deficit of just $18 billion for 2013/14 - has accelerated and is likely to be revised to more than $2 billion a week.

Without action to arrest declining revenues and significant cuts to spending programs, Treasury officials are believed to have warned that a return to surplus would be unlikely before 2022.

While around half of the latest blowout to $47 billion includes measures by the new Coalition government to boost the Reserve Bank's cash reserves by $8.8 billion this year, the bulk of the fiscal collapse will be slated home to Labor.

Labor's failure to properly cost its border protection policies and underfunding redundancies for public servants have added to the blowout.

The "alarming" revenue writedowns would have led to an ever greater deficit, a senior claimed, had the new Government not been able to partially offset them with significant savings programs.

"It is disastrous," a senior government source said.

"It's mind boggling the size of the mess Labor has left."

Shadow Treasurer Chris Bowen yesterday tried to ring-fence Labor's responsibility, claiming every dollar of a deficit over $30.1 billion would be owned by Mr Hockey.

But Prime Minister Tony Abbott warned that MYEFO would expose Labor's role in presiding over the "most disastrous period for budget management in our history".

"What we have discovered the more we dive deeply into the budget, the extent of Labor's fiscal disaster ... the extent of Labor's fiscal deception," he said. "Never has the budget deteriorated as quickly as it did under Labor despite the fact we had terms of trade at record highs.

"So this is a period of monumental economic incompetence under the Labor Party. The repair job begins."

Part of the repair job will be restoration of the NSW roads budget which the government will claim was left $220 million short by the collapse of Labor's mining tax. Projects left in limbo, to be restored in MYEFO include $80 million of New England Highway works at Bolivia Hill near Tenterfield, with a 3km section to be realigned to improve safety.

http://www.dailytelegraph.com.au/news/nsw/joe-hockey-to-unveil-labors-47-billion-disaster-australia-...

[lakeland27]

so he's admitting he can't produce a surplus.  thats fine, but why cant he be honest about it ?

another broken promise !  he hasn't got ten years either, he has 3.

[lakeland27]

I know the tele coloured the bottom line in red, but look.

[donnashuggy]

He can't even manage his weight so don't have too many expectations with him managing the economy.

[lurker17260]

So why did they tell the electorate they WOULD get back to surplus? And how many voted for them on that basis?
Please don't tell us it was because they didn't know, because that makes them look even more foolish and incompetent

[daydream**believer]

Yep, no surprises Labor stuffed the country.

[freddie*rooster]

It's easy to blame other's, especially when your followers are blind to the truth, but it takes guts to admit it's your responsibility when you're driving the ship.

[daydream**believer · Accepted solution]

---

@lurker17260 wrote:
So why did they tell the electorate they WOULD get back to surplus? And how many voted for them on that basis?
Please don't tell us it was because they didn't know, because that makes them look even more foolish and incompetent

---

I didnt vote based on that.

But i feel confident that Hockey will get the country back in surplus.

Liberal have always been better money managers than Labor imo

[daydream**believer · Accepted solution]

This Gov has been in for 100 days.

Theres no way they can fix the bad spending Labor did for years in only 100 days

[izabsmiling]

  The curious case of the never-ending deficit   DEFICIT BLOWOUT

The deficit blowout will be driven by a combination of revenue declines plus decisions taken by the Coalition since the election, including the $8.8 billion capital injection to the Reserve Bank, and not proceeding with $3.1 billion in tax changes proposed by Labor.

In addition, the $5.2 billion saving factored in over four years from axing 12,000 public servants has been put on hold because the efficiency dividends imposed by Labor and adopted by the Coalition will result in 14,000 public servants taking redundancies.

The Coalition double-counted when it planned to axe another 12,000.

Of course, the government says, all this will be Labor’s fault on Tuesday. Since the election, the government had planned to tip all the bad news and spending decisions into MYEFO and then present that as a snapshot of the mess it inherited. It says it will take responsibility from the May budget onwards, which will adopt recommendations from the audit commission and act as a road map back to surplus.

When this strategy was conceived, the Coalition was banking on there being enough residual disdain for the former government to fit it up for anything.

It is doubtful whether this remains the case. The first 100 days of the Abbott government has been so marred by controversies – self-inflicted and inherited – that is has lost its lead in the polls and squandered a great deal of its political capital. So much so, that fewer voters appear to be prepared to keep buying its lines. For instance, Labor’s very public resistance to abolishing the carbon tax appears not to have harmed it in the polls. This suggests the voter anger was more about Julia Gillard and her broken promise than the policy per se.

Losing capital so early will make it more difficult for this government to take the people with it if it is serious about imposing the fiscal discipline and policy reforms required to address the budget.

COURAGE NEEDED

Economists and commentators are always free with their advice, but they never face elections. There is a real chance that political timidity could creep in next year, right when courage is required.

After all, even when the Coalition was an unbackable favourite to win the federal election, the bravest it could be was to promise just $6 billion in net budget savings over four years. When Abbott addressed the Business Council of Australia two weeks ago, he requested patience, observing correctly that, in a democracy, reform took time.

If you implement measures for which you have no mandate, the people toss you.

The Coalition has tied its own hands with regard to doing anything meaningful before the next election towards boosting productivity. It has no education policy, no significant health policy and every other major area of policy linked to productivity is subject to a white paper review or an inquiry. These include industrial relations, tax reforms, childcare, industry assistance, energy, agriculture, federal-state reform, northern Australia and banking and financial services. It is a recipe more for short-term policy stasis than immediate action and one which could receive more attention after Tuesday.

Phillip Coorey is The Australian Financial Review’s chief political correspondent.

The Australian Financial Review

BY PHILLIP COOREY

http://www.afr.com/p/opinion/the_curious_case_of_the_never_ending_oQhqSORKidCQ8r7W2npXNN