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Abbott gives up on surplus as budget deficits soar to $100 billion; Federal budget deficits for next four years set to double to over $100 billion
Topic Started: 16 Dec 2013, 09:49 PM (2,435 Views)
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Budget fix promised as deficits soar

December 16, 2013 12:00AM

FEDERAL budget deficits for the next four years are set to double to more than $100 billion in a drastic revision to the nation's outlook, as Tony Abbott vows to embark on a "repair job" to cut spending.

Financial markets are bracing for a flood of new commonwealth debt following a budget update tomorrow that will spark renewed Coalition attacks on the "profligacy" of the former government.

The Abbott government will also add to its spending commitments when it releases the midyear budget papers, after buckling to pressure on major road projects costing $1bn across four states.

Loosening the reins on infrastructure outlays, the government will match some of Labor's road projects despite rejecting the proposals at the election because they were funded by the mining tax.

Federal cabinet will meet in Sydney today to sign off on dire new forecasts that will show a deficit of about $50bn this financial year and $30bn the next, sharpening the political debate over the cuts needed to balance the budget.

The government will announce today that it will go ahead with major projects including the Great Northern Highway and North West Coastal Highway in Western Australia, the Cape York regional roads in Queensland, four regional roads in NSW and roads near the Stuart Highway in South Australia.

All were promised by Labor under the regional infrastructure fund meant to be financed by the mining tax, which raised a fraction of the revenue claimed and put the road funding at risk.

The cabinet outcome on road funding takes the value of government tax and spending decisions since the election to almost $20bn, including the controversial move to replenish the Reserve Bank's capital at a cost of $8.8bn.

Other decisions within that total include dumping unfinished tax measures at a cost of $3.1bn, adding $1.2bn to school spending to honour an election promise and deferring $5.2bn in savings from a public-service freeze. The government is still finalising cuts to offset some of these spending decisions, including up to $400 million that is to be recouped by cancelling further work on trades training centres and finding similar savings in education. Some of the cuts to the public service may go ahead, subject to the review of the public-service freeze.

In another sign of the search for savings, the government launched a review yesterday into the $1.8bn Medicare Locals policy, opposed by many general practitioners on the grounds that the funds subsidise centres that compete with private doctors.

The Prime Minister went to the election promising a surplus "at least as quickly" as Labor claimed to produce one, suggesting a result in 2016-17 to match the $4.2bn surplus set out in the pre-election fiscal outlook.

The Prime Minister signalled yesterday that the surplus timetable would be revised tomorrow. "We said we would get the budget back to surplus at least as quickly as Labor had proposed. What we are discovering the more we dive deeply into the budget is the extent of Labor's fiscal disaster, the extent of Labor's fiscal deception."

Mr Abbott said the government would be "ruling a line" under the Labor Party's "fiscal disaster" in the mid-year update.

"It is absolute proof that you can't trust the Labor Party with money, but having laid out the full extent of Labor's disaster, the repair job begins."

Opposition Treasury spokesman Chris Bowen prepared for the budget revision by declaring yesterday that the "true state of the books" was in the pre-election fiscal outlook in early August.

"The fact is that MYEFO (mid-year economic and fiscal outlook) is Joe Hockey's mini-budget and will include billions of dollars of new government spending and revenue commitments in 2013-14 and beyond," Mr Bowen said.

"Every dollar over the estimated deficit of $30.1bn for 2013-14 belongs to Joe Hockey. The same for every dollar of peak debt over $370bn."

Read more: http://www.news.com.au/national/budget-fix-promised-as-deficits-soar/story-e6frfkp9-1226783653370
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Abbott gives up on surplus

Phillip Coorey Chief political correspondent

The Abbott government has abandoned its target of returning the budget to surplus in four years, blaming the “profligacy” of its Labor predecessor.

Ahead of Tuesday’s release of the Mid-Year Economic and Fiscal Outlook, Prime Minister Tony Abbott indicated a 2016-17 surplus was unrealistic.

“We said we would return the budget back to surplus at least as quickly as Labor had proposed. What we are discovering the more we dive deeply into the budget is the extent of Labor’s fiscal disaster,’’ he said.

Mr Abbott last pledged a 2016-17 ­surplus in late October, six weeks after the election, when he said: “We will get back to surplus at least as quickly as the former government claimed that it would get back to ­surplus.”

The final budget figures under the Labor government forecast a small surplus of $4.2 billion in 2016-17.

As first reported by The Australian Financial Review, MYEFO is expected to disclose a budget deficit for this financial year of about $50 billion and ­predict debt to exceed $500 billion beyond the four-year budget forecasts.

A source said this did not mean the government intended to let debt reach that level, but that was the scenario under a business-as-usual approach, based on current trajectories. Despite the MYEFO being the harbinger of a mean May budget, the government is still spending money.

On Monday, it will announce almost $1 billion in infrastructure spending spread across four states. The projects were slated under Labor to be paid for by the Regional Infrastructure Fund (RIF), which was supposed to be funded from the mining tax. The mining tax has raised negligible revenue and is in the process of being abolished, along with $13.4 billion in policies it was earmarked to fund.

These policies include the RIF, superannuation contributions to ­low-income earners and tax breaks for small business. The legislation is stuck in the Senate, with no prospect of ­passage until after the new Senate sits on July 1.

It is understood the decision to proceed with the infrastructure spending caused some disagreement within government.

On Monday, Deputy Prime Minister and Infrastructure Minister Warren Truss and Assistant Infrastructure Minister Jamie Briggs will commit $480 million for road projects in Western Australia, $220 million for NSW, $210 million for Queensland and $85 million for South Australia.

“Despite the former [RIF] being bankrupt due to Labor’s dud mining tax, the Coalition will now work to pick up the pieces and work with the state governments to deliver these ­important projects,” the ministers said in a statement.

Read more: http://www.afr.com/p/national/abbott_gives_up_on_surplus_0Sg3G7uDCNFiVWnSbhb63L
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Count du Monet
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"It is absolute proof that you can't trust the Labor Party with money, but having laid out the full extent of Labor's disaster, the repair job begins."


That might be true, but Abbot won't know how to contain his spending and appears to be panicking around in circles. Why does this feel a bit like 40 years ago?

The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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Pig Iron
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Bogan scum

inspite of labour having record high tax revenue of $313,888 MILLION in 2012, they still manage to handball a raped and pillaged treasury with NOTHING to show for it.

and yet some people would vote for them tomorrow if given the chance. it leaves me stunned when i think about it.
I am the love child of Tony Abbott and Pauline Hanson
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Foxy
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Zero is coming...

I think the labour party should have royal commission into them to find out what happened to the finances of this country.
This is a terrible state of affairs.
When will socialists understand it never works.
They think the rich people will just work for nothing, to pay them to eat cream donuts and sip latte's.
This mess will take years to sort out.
Peter
:pop:
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Ex BP Golly
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foxbat101
17 Dec 2013, 12:15 AM
I think the labour party should have royal commission into them to find out what happened to the finances of this country.
This is a terrible state of affairs.
When will socialists understand it never works.
They think the rich people will just work for nothing, to pay them to eat cream donuts and sip latte's.
This mess will take years to sort out.
Peter
:pop:
Treasurer of NSW: "Hmmmm, doughnuts!"

Posted Image
Edited by Ex BP Golly, 17 Dec 2013, 02:12 AM.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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Admin
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Joe Hockey's budget deficit means there will be pain for everyone

JESSICA IRVINE
December 18, 2013 12:00AM

THE DEVILISH task confronting Treasurer Joe Hockey to get Australia's budget back to black has been laid bare.

And make no mistake: there will be pain for everyone.

No more Mr Nice Joe. It now falls to Hockey to wield the budget scythe.

If not, and nothing is done to fix the budget, get set for a $666 point something billion (rounds up to $667 billion) mountain of government debt in a decade.

At 26 per cent of gross domestic product, that's still relatively low by international standards.

But it's a completely unacceptable legacy of the biggest mining boom since the gold rush days.

How did we get in such a mess?

Treasurer Joe Hockey has blamed Labor for the state of the budget ahead of the MYEFO.

Obviously the former Labor government must accept much of the responsibility.

Despite a self imposed commitment to grow spending by only 2 per cent on top of inflation, a post mortem analysis reveals spending actually grew by nearly double that, by 3.5 per cent.

There were mitigating circumstances of course - the biggest financial crisis since the Great Depression called for some stimulus spending.

But it's clear we should have spent much less.

Particularly since being "Keynesian on the downside" as Wayne Swan used to call it - ie. getting out the hose and spraying cash around - is so much more attractive to politicians than the more difficult task of being "Keynesian on the upside" and reigning in spending.

But Labor is not the only reason we are in a budget crisis. The Coalition too can also accept a small part of the blame. With hindsight, the income tax cuts delivered by Howard and Costello were unaffordable in the long run and should have been banked in a Future Fund style sovereign wealth fund to save for a rainy day.

But the major reason Australia's budget is in a hole is that Australia's economy itself has hit a major pothole. The "upside" has simply failed to materialise. The rainy days are here.

Not only is the mining investment boom over, but investments are being wound back even quicker than expected.

And despite lower interest rates, other parts of the economy like retail and housing construction, are not rushing in to fill the gap.

"The budget position has deteriorated significantly," yesterday's budget update states.

You don't say.

Treasury has lopped a massive 1 percentage point from its forecast for national income growth next financial year. Less income means less tax revenue paid to government and that's the major reason for the ballooning deficits and debt.

So why is Treasury suddenly so much more pessimistic?

There are a couple of reasons.

First, at the request of the government, Treasury has had another look at the way it forecasts commodity prices. It is now predicting a much sharper drop in prices in the near term as global supply of iron ore, coal etc catches up to global demand.

That means less money coming into coffers from company profits.

Second, Treasury has become a lot more pessimistic about your next pay rise. As the economy has slowed, profit margins have been squeezed and securing that next payrise is about to get harder. That means less income tax money for government.

Yesterday's numbers contain the stunning revelation that wages will not grow at all in real terms this financial year.

Yes you read that right.

Wages are expected to grow just 2.75 per cent this financial year - down from a forecast of 3.25 per cent just three months ago - and this entire pay rise will be eaten up by predicted inflation in consumer prices of 2.75 per cent.

Happy Christmas everyone.

Read more: http://www.dailytelegraph.com.au/business/jessica-irvine/joe-hockeys-budget-deficit-means-there-will-be-pain-for-everyone/story-fnj45kvd-1226785264317
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Elastic
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The state of the budget would probably rule out any stimulus spending as the economy continues to sink.
Call it Schadenfreude but I'm enjoying watching these incompetents at work.
Like a posse of clowns trying to perform Swan Lake.
The response is so predictable and unfortunately the pain will mostly be carried by those least equipped to deal with it.
Only a rat can win a rat race.

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themoops
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Pig Iron
16 Dec 2013, 11:16 PM
inspite of labour having record high tax revenue of $313,888 MILLION in 2012, they still manage to handball a raped and pillaged treasury with NOTHING to show for it.

and yet some people would vote for them tomorrow if given the chance. it leaves me stunned when i think about it.
NBN. That was all they were good for.

People vote Labor because they're scum. If you're on $100k they've blindly declared you as sub human. They simply want to steal a lot of your pay packet and give it to themselves because they're too gutless to do anything difficult in life.

It shouldn't stun you. Property bulls are the same.

Why the is the Libs borrowing this extra $200bn, and removing debt ceilings? Primarily to prop up your housing bubble. So you're quite the hypocrite.


Edited by themoops, 18 Dec 2013, 10:09 AM.
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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Catweasel
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Catweasek say it a irony,

that a budget the deficit have power to create a calm in sandpit,

but it signal very the important to rapscalls:

inability for even pointy of heads to predict.

While a white shoes running from a door to a door,

sharing a good news or plan to keep mouse implanted in mouse society,

Of the course,

master point fingers at other master,

because that what mouse like to hear.

It the kind of populist,

which necessary for control of mouse skull.

Catweasel say new the narratives emerge:

-- Budget the deficit a good for mouse household

-- Budget the deficit and mouse house live in alternative universe

And everthing be a hunky dory.
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