6 years ago
NEW TREASURER FUELS CONFUSION OVER BUDGET RULES
CHRIS BOWEN MP
Well there’s another new Liberal leadership team but it’s the same old confusion and chaos when it comes to policy and Budget matters.
Just last week the new Treasurer Josh Frydenberg when asked whether the new spending for schools would be offset consistent with their own budget rules, he said “we’re not making cuts in our economy….what we are doing is growing our economy”.
Under anyone’s interpretation this was a clear backsliding from the Government’s self-imposed budget rules which commit that “new spending measures will be more than offset by reductions in spending elsewhere”.
But now less than a week later both the Prime Minister and the Finance Minister are seemingly on a different script to the new Treasurer clearly committing to the current budget repair strategy and that all new spending will be fully offset.
FRAN KELLY: Let me put it another way. As Treasurer you had a bit of golden rule that any new spending had to be offset with savings elsewhere in the Budget. Is Josh Frydenberg going to be operating under those rules?
MORRISON: Well they’re the Budget rules.
KELLY:Still the Budget rules?
MORRISON: Yeah.
RN BREAKFAST WITH FRANK KELLY – 26 SEPTEMBER 2018
TOM CONNELL: You did have previously this rule that any new spending would be offset by savings elsewhere. Is that concrete rule now gone?
CORMANN: No. I mean I don’t know where all this speculation comes from. The rule remains precisely the same.
SKY NEWS FIRST EDITION – 26 SEPTEMBER 2018
The only thing that is clear is that the Government isn’t clear about its own Budget strategy.
Who should we believe? If the new Treasurer is right, then the Government has just like in recent Budget updates completely abandoned offsetting new spending decisions. If the Prime Minister and Finance Minister are right, then we can expect more cuts to government services in the upcoming MYEFO.
Whatever the government says, we know it has given up on these budget rules, they are rules on paper only.
For years the government has committed to offsetting all new spending and banking any unanticipated uplift in tax receipts yet in the most recent Budget it dropped that, choosing unfunded income tax cuts over budget responsibility.
Yet the more desperate this government becomes, the more it thinks it's can walk both sides of the fence, on one hand committing to its own budget rules, and on the other relying on a "stronger economy" to support new spending.
With at least one budget update to come before an election, Labor will hold the government to account on these matters.
The global economy is in the midst of its strongest upswing in a decade, which means the Government should be “banking” extra unanticipated improvements to insure Australia against rising global risks.
Only yesterday the Bank for International Settlements confirmed once again that Australia has the second highest household debt in the developed world, household debt increased again last quarter and now stands at 122% of GDP.
Unlike the Government, Labor has made the tough calls such as reining in and reforming unsustainable tax concessions such as negative gearing and capital gains.
These decisions will help put the budget on a more structurally sound footing giving Australia an extra buffer in the event of a shock.