Good night, Merry Christmas, and don't eat all the prawns
That’s all folks. It really is goodbye from Politics Live now for 2015.
Let’s wrap the main points of MYEFO, apart from my take home analysis, which I shared by reader request in the last post.
[Politics Live theme music, roll credits.]
Here are the known knowns.
- MYEFO has confirmed the budget deficit has blown out by $26bn over four years since May budget projection.
- The deficit for 2015/16 is now expected to be $37.4bn compared to $35.1bn at time of the May budget. For 2016/17, the deficit is forecast to be $33.7bn compared with a previous $25.8bn.
- Growth forecasts have been downgraded to 2.5% in 2015/16 (from 2.75% in May budget) and 2.75% in 2016/17 (from 3.25%).
- Assumed growth in 2017/18 and 2018/19 is now 3% not 3.5%.
- The iron ore price is now assumed to be $39 a tonne rather than $48 in the May budget.
- Return to surplus is now projected to be one year later – in 2020-21 – with total deficits of $108bn over four years from 2015/16 to 2019/20.
- Net debt is higher and peaking one year later – in 2017-18.
- Unemployment is forecast to fall to 6% for 2015/16, down from 6.5% in the may budget. The forecast for 2016/17 is 6% compared with a previous forecast of 6.25%.
- Key quickie pre-Christmas savings include $1.3bn from welfare fraud by data matching between the tax office and Centrelink; $650m by ending bulk-billing incentives for pathology and cutting other bulk-billing incentives (with the government evidently not yet tired of its now long running war with the medical profession); and $534m from payments to aged care providers.
- These savings offset spending since the May budget including the $1.1bn innovation statement, another $400m for asylum seekers awaiting processing in Australia, $909m to pay for the special intake of Syrian refugees and an extra $300m for roads.
Thank you all for your support and your brick bats throughout 2015. I appreciate both – although some days I probably appreciate the support more than the brickbats if I’m completely honest.
Thanks to my colleagues, who fuel the blog when I can’t manage another word – and to Gabi and Mike, my partners in live blogue crimes against the Guardian Australia readership and politicians of all stripes.
See you in February.
As you asked, the objective lesson of MYEFO
Some readers have asked me what is the objective lesson of the day given I didn’t buy Bill Shorten’s lesson of the day: that this MYEFO contained harsher cuts than Tony Abbott and Joe Hockey’s handiwork.
The objective lesson of the day in my mind is pretty simple.
Fixing the budget will be a tough task. It will require raising additional revenue (whatever Scott Morrison might say), as well as ensuring efficiency in government expenditures. It will certainly require a more comprehensive approach than building in quickie paper savings from welfare crackdowns (that may or may not eventuate), or chasing savings in health that you pretend won’t hit the consumer when, self evidently, they will hit the consumer.
This budget update has the distinct sound of desperate chasing of rats and mice in the hope that the budget trend will look vaguely credible. Sorry, it still doesn’t look credible. Much more work to do.
Not only substantial policy work, also framing work. The government is trying to move past the mess of Tony Abbott and Joe Hockey, who came into government with thunderous over statements about the perilous state of the books, while peddling the fantasy the budget could be fixed without pain. But if the reboot is just folksy analogies about back seat drivers getting angsty about budget strategy – that ain’t going to cut it. Australians comprehensively rejected the agenda laid out in the 2014 budget, and the vehemence of the rejection has forced the government to go back to first principles at a time when it needs to be making a case for re-election.
So what’s the summary?
The objective lesson of MYEFO is it’s about time the political conversation about fiscal sustainability and economic reform got serious, because we’ve about had it with the quick fixes and sugar hits and the nasty surprises that appear random because they are random.
The objective lesson of MYEFO is the government – in budget terms and reform terms – has blown its first two years in government. Whether it blows a third remains to be seen.
How could I have missed the capping of the green army?
The government will achieve savings by capping the number of green army projects at 500 per annum.
Saving? $317.5m.
The environment minister Greg Hunt will be very sad but pretending he is perfectly happy because that’s his form.
Slight walk back in progress
We’ve had a few iterations today about the impact of the MYEFO health savings on people. Mathias Cormann said, rather uniquely, earlier on today that the changes to bulk billing incentives was not expected to have an impact on people.
Health minister Sussan Ley isn’t quite going that far. This is her formulation.
We do not expect the changes to affect the majority of consumers due to the high level of competition in the sector, and will ensure some of these services are better aligned with other medical and health providers, such as GPs.
It’s also important to note bulk billing incentives are paid direct to the pathology or diagnostic provider, not the patient. Patients with high out-of-pocket medical costs will also continue to be covered by the Medicare Safety Net protections.
Agility, anyone?
Communications minister Mitch Fifield.
The government has announced it will not proceed with the Book Council of Australia. This decision is reflected in the mid-year economic and fiscal outlook. I will be consulting widely with the literary community about alternative sector-led mechanisms for representation and promotion. I thank those who had indicated their willingness to serve on the council, particularly Louise Adler AM, who had agreed to be chair, and the many people who have generously shared their views on Australian writing and reading.
This comparison isn’t like for like but it is illustrative. Just one little cameo from the arts portfolio.
Readers might remember earlier this year the government announced it would kick in $47.3m for two Hollywood blockbusters – Alien: Covenant and Thor: Ragnarok. There was much excitements and if memory serves, Ridley Scott beamed in from somewhere or other to be thrilled.
But today the government pulled $52.5m from the communications and arts portfolio. The savings include imposing a 3% efficiency target on cultural and collecting agencies (reaping $36.8m), pulling back $9.6m from arts programs, including ending the Book Council of Australia, and pulling $6m from the department.
As was once sung in a popular musical, nothing comes from nothing, everything has got a little price.
Be alert, not alarmed 2.0
I’m still working carefully through the fine print. Despite all the belt tightening, the government has found $10m for a national security awareness campaign for this financial year.
The campaign is designed to encourage the public to report suspicious activity to the national security hotline and will use television, radio, print, outdoor and online media.
Co-payment by stealth
The Australian Medical Association has slammed the decision to reduce incentives for bulk-billing pathology and diagnostic services, saying the measure made up part of the now defunct GP co-payment proposal.
“Despite Tony Abbott saying that the measures are dead, buried and cremated, it appears that the hand of the co-payment component is reaching out beyond the grave,” the AMA president, Brian Owler, told Guardian Australia.
Reviving the measures “came out of the blue”, Owler said, adding that the health minister, Sussan Ley, had not flagged the policy with the AMA or with pathology and diagnostics experts. The Myefo announcement “makes a mockery” of Ley’s clinician-led Medicare review, he said.
Cutting bulk-billing incentives “creates a false economy”, as it often shifts costs in the health system from primary care to the much more expensive public hospital system, Owler warned. “A significant proportion of the population will not proceed with medical tests,” he said. “That could be very dangerous for the patient.”
Updated
Now some key social services savings measures:
- There’s a $105.1m saving from including parental leave pay and father and partner pay payments in the definition of income for commonwealth income support payments.
- An outlay of $29.5m to expand debt recovery in human services, which books a $157.8m saving.
- A $1.3bn saving from “recovering money for a greater number of people where discrepancies have been identified between employment income declared to Centrelink and PAYG information provided to the ATO.”
- An additional $694.8m from data matching.
- A $94.4m saving “by using the gross value of reportable fringe benefits rather than the adjusted net value when assessing income for family and youth payments”.
- A saving of $225m by removing access to government payments for newly arrived residents “if applicants are a family member of an Australian citizen or a permanent resident”.
Updated
While I chase welfare, another chart from Nick Evershed.
Further and betters on the health measures
It’s worth outlining the health-related measures in a degree of detail.
- Myefo books savings of $61.9m over four years by “strengthening compliance activities associated with the provision of funding to residential aged care providers”.
- There’s a $472.4m saving over four years by “refining the aged care funding instrument through changes to the scoring matrix that determines the level of funding”.
- There’s another $26.6m saving from ending the better access to radiation oncology program.
- There’s the $650.4m saving from removing bulk-billing incentives for pathology services, and reducing the bulk-billing incentive for MRI services from 15% to 10% of the MBS fee.
- A further $146m saving from redesigning 24 health programs to operate more efficiently.
- A $70m saving by reducing the number of bodies in the health portfolio to reduce overlap and “improve efficiency”.
- There’s a $595m saving by streamlining funding across a range of health workforce programs, including ending the clinical training fund, the rural continuing education program, the aged care education and training initiative and aged care vocational education and training professional development programs. Half of that money is being redirected not trousered.
Some of these measures are quite specific and others are quite vague. Speaking of vague, I’ll look at welfare next.
Updated
Bill Shorten
The lesson of today’s Myefo statement is that Malcolm Turnbull and Scott Morrison are proposing cuts which are harsher than those of Tony Abbott and Joe Hockey.
(Objectively, no, that is not the lesson of today.)
Updated
Chris Bowen, warming to the theme of let’s have an Myefo analogy-off.
Of course, the biggest save is increase compliance when it comes to social welfare. Well, of course, Scott Morrison is a one-trick pony. We have heard it all before. When it comes to finding savings, he’s got one trick and he rolls it out every time. And that is increase compliance when it comes to social security.
Well, Scott Morrison can talk up a storm, but he delivers a light shower.
Updated
The Labor leader, Bill Shorten, is holding a press conference in Sydney. He’s unhappy about the cuts.
Instead of looking at multinational taxation, or superannuation tax concessions, the Liberals are at it again. They are proposing the harshest cuts to the people least able to protect themselves.
The shadow treasurer, Chris Bowen, wonders what is the point of the Turnbull government.
Today’s midyear economic update is a report card on the progress of the Liberal government in meeting their promises when it comes to the economy. And the report card is a great big failure.
We know that according to the government’s own figures, we face a future of higher deficits and lower growth. What we are seeing is two years of economic and budget mismanagement by the Liberal government.
Now, deficit reduction and returning to surplus was at the heart of this Liberal government, and it begs the question: if they have no plan to return to balance, what is the point of the Turnbull government?
Updated
Introducing a new price for pathology will not help improve primary care services and will discourage early diagnosis: Consumers Health Forum
The first run reaction to the pathology savings measure seems to confirm my first run reasoning – how do patients not face higher out-of-pocket costs as a consequence of this?
The Consumers Health Forum says the measure raises the prospect of a fresh cost barrier that could dissuade patients from undergoing important tests.
Consumers Health Forum chief, Leanne Wells.
Many patients requiring pathology tests would face out-of-pocket costs for the first time under these budget measures, if pathology practices fail to absorb the impact of reduced Medicare benefit payments. Pathology tests for the most part have not attracted any out-of-pocket charges in the past.
The government’s saving measure however poses a new hurdle in the way of patients whose GP has referred them for what could well be a significant test. CHF appreciates the very difficult challenges faced by the government in the latest economic forecasts, but we need to keep the impacts on the health budget to a minimum.
Australia needs to be strengthening its primary care services, as shown in a recent international survey and as canvassed widely by the government’s Primary Health Care Advisory Group’s recent consultations on how we can better respond to people with complex and chronic conditions.
Introducing a new price for pathology will not help improve primary care services and will discourage early diagnosis. Worryingly the government will extract another $1bn in cuts over four years from aged care and health workforce funding when so many services are already stretched.
Updated
My colleague Nick Evershed is head down working up charts, bless him. Down, down, projections are down.
While I’m delving, the finance minister is continuing to insist the removal of bulk billing incentives in both pathology and in medical imaging scans won’t hit patients. I’ll be interested to hear what the Australian Medical Association has to say about this, because on the face of it, if you remove a bulk billing incentive there will be more out of pocket costs faced by patients.
Cormann has just told the ABC there shouldn’t be any impact on patients in need of the sort of support that is provided as a result of bulk billing incentive payments.
He adds:
Incidentally, the $650m saving helps us to pay for the $621m in additional expenditure that we’ll be incurring in relation to various drugs in the context of cancer treatments that have been listed on the Pharmaceutical Benefits Scheme. So the money has been redirected within the health system.
Updated
During my live coverage of the press coverage I referenced a measure about the China FTA which I wasn’t across and did not want to garble.
Having consulted the Myefo tome, essentially the government is estimating it will lose $4.2bn in revenue from tariffs over the forward estimates courtesy of signing the free trade deal with China. According to the explanation, the government had already accounted for the cost to revenue (presumably in the contingency reserve) but now there was full accounting.
From the measure description.
Going forward the government has decided not to offset the revenue impacts of free trade agreements. This decision has been taken because the government believes there should not be domestic tax increases or reductions in domestic spending to offset the revenue impact of free trade agreements that provide benefits to Australian business and consumers.
Updated
Just while I’m delving, my colleague Lenore Taylor has filed some commentary. She makes the excellent point that the government’s “let’s get serious about budget repair” timetable is about to collide into the political cycle – an election year.
Here’s Lenore:
Even taking into account treasurer Scott Morrison’s slightly tortured holiday road trip metaphor to explain the patient road back to surplus (the careful route of restraining expenditure and trying to boost growth, rather than the potentially destructive shortcut of slashing spending – and voters should not get impatient and start asking ‘Are we there yet?’ from the back seat) the government knows it has to explain how it will speed things up in the budget next May and its pre-election manifesto.
But Tony Abbott already did a pre-election budget last May, a desperate attempt to climb out from underneath the political disaster of his first budget and get ready for a possible national-security focused election early next year.
The good news for Turnbull is that the change of prime ministership has given the Coalition the political capital to spend.
The latest Newspoll shows the Coalition ahead 53% to 47% on two-party-preferred terms and Turnbull the preferred prime minister of 60% of the nation.
His big judgment now is how to balance those political numbers against the worsening economic ones in the budget.
Updated
The press conference is over now. Give me a minute to burrow and I’ll be back with further and betters.
Lots of fun times under way about the car, I see.
@LightheartedDan @stilgherrian @murpharoo I think Scott might be hoping Australia just stops asking and falls asleep pic.twitter.com/l8ZQLr0GuY
— RottnestYuleTurbine (@Rottoturbine) December 15, 2015
Updated
Peering into Scott Morrison's back seat. Yes, we need to.
More Morrison, and the back seats of cars.
We need to look at this carefully.
I’m pleased that this year’s budget position as forecast will be better than last year and better the year after that. That shows we are making progress towards our destination. We are not there yet but we are not going to take detours or shortcuts. We are not going to put the safety of the passengers at risk.
Those passengers are growth and jobs of Australians. That’s why we will remain very focused on this workmanlike approach to delivering on this task. That’s what Australians expect of the government. They don’t think there is any magic solution to this. They don’t think there is one save or tax that will solve this problem because their situations are just as complex and they don’t see simple answers to the things they face.
With the Australian people, we are very much on the same page. I don’t think they would like to see more extreme positions adopted in how we deal with this issue. They would very much appreciate the very patient approach we are taking to this because that is what, at the end of the day, is going to preserve jobs and increase growth.
This language is all very well. Sensible in fact. But it begs two highly pertinent questions: why did the Coalition radically oversimplify the budget challenge in the effort to secure government in 2013? And why did it adopt extreme positions during its first budget in 2014?
Updated
Q: What sort of proportion of the new measures you announced today will you need to get through the Senate?
Scott Morrison
There are a variety which are administrative and executive matters and also legislation.
They’ll be presented as we go back into parliament next year and so you’ll see that very plainly at that time.
Updated
Scott Morrison, on the health savings:
We are applying the same targeting that applies to doctors and bulk billing of doctors to this area. The previous government allowed this program to get out of control and to go beyond what we would consider was its original design. When you are dealing with the budget, you need to make sure not just that your revenue is fit for purpose but your expenditure is fit for purpose.
There are clear purposes around bulk-billing incentives. When they are out of alignment with the way the rest of the system works, that’s how you bring your budget back to balance.
Updated
Pathology nasties not expected to impact on people: Cormann
There’s a question about a China FTA measure which I’m not yet fully across. Rather than garble my explanation I will check that after the press conference and explain it to you properly.
Q: A big picture question: in the press release, it talks about adding $400m to the bottom line over four years. That’s the net saving. At a time when the commonwealth spends about $400bn a year, is it really not possible to find any other waste to scale back in the federal government?
David, this is a budget update, it is not a budget. The budget will be the next time when we work through these measures again.
Q: I wonder if you could explain the decision. There is a $650m saving in the Medicare benefit schedule changing to diagnostic and imaging services. That will have a significant impact on people and on savings. What’s behind that policy?
Mathias Cormann
It is not expected to have an impact on people.
What we are seeking to do here, in the main, is make the benefit arrangements consistent with those that apply in the context of benefits for GP services so there is what is described as a bulk-billing incentive payment in relation to GP services that is limited to concession cardholders, children under 16 years of age and so on. In relation to the bulk-billing incentive payment for diagnostic imaging services, we are essentially making it entirely consistent with that. We thought that was an anomaly here.
In relation to pathology services, we are removing the bulk-billing incentive payment because there is a very strong competitive sector here; there is about 89%, 90% bulk billing takes place as we speak in relation to services provided through the pathology service providers so there is essentially not the additional benefit provided by continuing that arrangement in place. That is essentially the main driver.
Updated
A GST WA question. When in Perth ...
Then to the nasties.
Q: Can you explain what the health workforce programs are that will save over half a billion dollars?
Mathias Cormann
There is a range of workforce-related programs across government in relation to health and the aged care sector in particular. What we found is there is a level of duplication and inefficiency and our focus has been on removing duplication wherever we can, on making sure that all government spending, in particular and including this area, is as efficient and effective and targeted as possible and the details are there in the measure description.
(I haven’t looked yet. I will look when we get through this.)
Updated
Q: The price of US$39 a tonne in this document, is that realistic?
Mathias Cormann
It is based on the four-week average – which is the methodology used by treasury. This is an update; this is where it was struck at the time of finalising this document. There will be a budget next year.
Updated
Q: The deficits is now far worse. You are not putting off difficult decisions into the future?
Scott Morrison
This is Myefo – this isn’t a budget. This is an update on the budget. It contains savings and other measures that more than account for the spending decisions that have been taken since the last budget.
We will go to a budget next year and we will look further to what needs to be achieved.
Q: Is there a plan B if the Senate doesn’t cooperate with the savings ... you have counted here or if the iron ore price continues to fall? Currently it is below the price that’s in this document. Senator Cormann, the narrative of jobs and growth does not ring true in WA at the moment. So how bad is it going to get in WA?
Mathias Cormann
Firstly in relation to your question about the Senate, our budget and now updated in this budget update is our plan. That’s the plan we are putting forward, openly and transparently forward for all to see to assess and scrutinise. The budget is our plan. Of course we have been, as the treasurer has been saying, been making significant progress in getting our budget through the Senate. We are continuing to work our way through this.
The price for iron ore, the price we are able to achieve in global markets in iron ore went from a high of $180 a tonne to $38-$39 a tonne at the moment. When iron ore is about 20% of our national export income, of course you’d expect that to flow through. But the good news is that the economy, including here in WA, is actually transitioning quite well.
Updated
There was more scene setting but I’ll recap later. Questions now.
Q: Is the promise made by Tony Abbott about a return to 1% budget surplus of GDP dead? If the economy is gaining momentum as you have just mentioned, why have you been forced to slice your forecast GDP, household consumption, dwelling investment, non-mining investment and terms of trade?
Finance minister Cormann says the failure to deliver on Abbott’s surplus promise is not a new development.
Mathias Cormann
Previous budgets and budget updates have clearly spelt out the fact we are facing additional global economic head winds. We are facing additional challenges given what’s been happening to our terms of trade. Everybody knows the price for iron ore is much lower now than what it was when we came into government. I think you’ll find the question you asked today does not relate to a new development in our half-yearly budget today. It is something we have previously readily acknowledged.
Scott Morrison
It may well be that things may improve more than what we have said in this document. That would have the obvious positive impact, but what we have in this document, I think, is a very realistic and honest outlook. We know where the destination is and we know how we’re going to get there and we will arrive there when expenditure is less than revenue.
More on the virtue of patience and responsibility when it comes to deficit reduction.
Scott Morrison
Despite revenue write downs of almost $34bn caused by falling commodity prices, a declining terms of trade, weaker global growth and the adoption of more realistic domestic growth outlook, we continue patiently and responsibly on the path to budget balance.
I want to stress those words: patiently and responsibly.
The car does beg the question: who are the nagging deficit obsessed kids in the backseat? It used to be the two men currently at the microphone. But I digress.
Scott Morrison addresses reporters in Perth
The treasurer has opening the rhetorical batting on Myefo with the predictable language about the economy rebalancing.
He then chooses a holiday analogy to explain deficit reduction.
Yes, he did.
Scott Morrison
As we go into this summer season and Christmas season, many Australians will jump in the car and they’ll head off to their favourite holiday destination.
They know where they’re going and they know how to get there, there are no short-cuts, there may be some delays on the way with roadworks or things like this – there will be plenty of people in the back seat, which often happens when I’m driving, the family saying: “Are we there yet? Are we there yet?”.
That’s natural. The path back to budget balance is similar to that. We need to take a safe and careful route and one does not put at risk our jobs and growth.
Updated
Pathology and other nasties ..
My colleague, Daniel Hurst, on the nasties.
The new cuts include $650m over four years through changes to bulk-billing incentives.
The government says it will remove incentives for pathology services and reduce the incentive for MRI services. It says it will align incentives for diagnostic imaging services to the ones that apply to GP services, with incentives continuing to apply for patients with concession cards and children under 16.
Morrison is also banking on $1.3bn by expanding the welfare payment integrity measure announced in the last budget, which was already slated to achieve $1.7bn.
The government says the new measure will focus on recovering money from a greater number of people where discrepancies exist between the employment income they declare to Centrelink and the “pay as you go” information provided to the tax office.
MYEFO at a glance
Here are your key points, via my colleague Lenore Taylor.
- budget deficit blows out by $26bn over four years since May budget
- growth forecasts downgraded to 2.5% in 2015/16 (from 2.75% in May budget) and 2.75% in 2016/17 (from 3.25%)
- assumed growth in 2017/18 and 2018/19 is now 3% not 3.5%
- iron ore price now assumed to be $39 a tonne rather than $48
- return to surplus now projected one year later in 2020-21
- net debt higher and peaking one year later – in 2017-18
- key savings include $1.3bn from welfare fraud by data matching between the tax office and Centrelink, $650m by ending bulk-billing incentives for pathology and cutting other bulk-billing incentives and $534m from payments to aged care providers
- these offset spending including the $1.1bn innovation statement, another $400m for asylum seekers awaiting processing in Australia, $909m to pay for the special intake of Syrian refugees and an extra $300m for roads
Updated
One other quick refresh before we get the new material. Some of the news reports in the lead up to MYEFO have indicated the government will seek savings today through strengthening the integrity of welfare payments, rather than going after people’s current entitlements. If correct, this is an attempt to make budget savings look painless.
But big “integrity” savings seems pretty ambitious when you consider the May budget’s second biggest savings measure was a $1.7bn proposal to strengthen the integrity of welfare payments. That particular saving was number two after the changes to social security assets tests and taper rates ($2.4bn). The budget’s welfare crackdown measure was seen as a rather large saving to book at the time given the description of the measure in the budget papers wasn’t all that specific. I’ll be interested to see what emerges today.
Let's refresh our memory on key forecasts
A quick reminder of some of the key budget forecasts before we get the fresh material.
- The deficit was forecast to be $35.1bn for 2015-16.
- The budget was forecast to return to underlying cash surplus in 2019-20.
- Tax receipts were downgraded by $52bn over four years – driven by a near halving of the iron ore price and persistently low wage growth.
- The iron ore price was forecast at $48 per tonne.
- Real GDP growth was forecast to increase from 2.5% in 2014-15 to two and three quarter per cent in 2015-16, to three and a quarter percent in 2016-17.
- Unemployment was forecast to peak at 6.5% in 2015-16.
Earlier, I mentioned the government walking away from the florid budget emergency rhetoric it used so volubly in opposition. It’s all about rebalancing now. Here’s a small case study of that.
This is from an interview the finance minister Mathias Cormann did this morning with Virginia Trioli on ABC news breakfast. It doesn’t need me to set it up, the back and forth will be clear if you read on.
Q: If the deficit comes in between $35 to $38bn will that be described as a budget emergency?
Mathias Cormann:
Well, what you will see in the budget update today, as the government continues to make progress in putting Australia on a stronger economic and fiscal foundation for the future, our economy is transitioning from significant resource investment-driven growth to broader drivers of economic activity and when it comes to the budget, what we were able to see at budget time was that the budget position was improving over the forward estimates and that we were getting back into balance at an appropriate speed and of course since budget time there have been some additional headwinds. The price of iron ore has fallen further. Everybody knows that that does have flow-on consequences. The government’s focus has been on policies to strengthen growth such as the innovation statement released last week but also on controlling expenditure – and what the budget update to be released today will show is wherever we are to incur additional payment they have been more than offset by reductions in expenditure in other parts of the budget and so that overall expenditure in this budget update is lower than what was forecast at budget time.
Q: That’s a good speech but it doesn’t answer my question which is whether that figure between $35 and $38bn would be described as a budget emergency. Let me ask it another way. If you were in opposition and the Labor government came back with that figure ... would that be acceptable to you?
Well, we are on a credible path back to surplus.
Q: That’s not my question. I’m going to jump in. That’s not my question and I’m happy you’re on a credible path and you believe that but we’ve had lot of rhetoric over the years about what’s acceptable and unacceptable when it comes to a deficit. If we hit the figure between $35 and $38bn, if you were on the other side, would you stand up and say, “Fair enough, good figure.”?
Virginia, I’m happy for you to go into the politics and into the commentary.
Q: That’s not the politics, minister, that’s how you’ve played it. You’ve played it very hard with strong rhetoric so does the rhetoric apply to you?
Well, Virginia, you can go into the politics and you can try and get me into the commentary.
Q: How about trying to get you to answer a question?
Updated
Here’s a sample of various MYEFO news previews this morning.
- David Crowe and David Uren, The Australian. “The nation’s debt will climb past $600bn as the Coalition’s struggle to reduce spending is reflected in another blowout in the budget deficit to be revealed today. Gross debt is now tracking to reach the nightmare scenario flagged by the Coalition in its first budget statement after it won the 2013 election, when it warned of the “massive” burden and declared it would not leave the problem for another day.”
-
Phil Coorey, Australian Financial Review. “Economic growth forecasts will be cut by up to 0.5 of a percentage point in Tuesday’s midyear budget update that will predominantly target welfare compliance in an effort to recoup more than $5bn in new spending since the May budget.”
In addition to those news pieces that are about to be overrun by events, Fairfax economics editor Peter Martin has also written a good column about why this MYEFO statement will be bad news, and why we need it to be bad news, because the government needs to “stop building unlikely Senate decisions into their forecasts and ... be honest about what is happening to revenue.”
The commentary is timeless and might be one you bookmark for later. You can read Peter here.
Updated
What was I saying before about red ink? Courtesy of David Uren, economics editor at The Australian (shared by his colleague David Crowe and now, me) – the top line of this chart is the official budget forecasts for the deficit. The red column is the blowout predictions of various market economists. Average blowout $33.3bn.
Another budget cheat sheet for #MYEFO today, from David Uren's work on Monday. More online: https://t.co/qVZ6VGPFPV pic.twitter.com/D0DpD1uejf
— David Crowe (@CroweDM) December 15, 2015
Dust off your calculators ..
Greetings and welcome to today’s live coverage of the midyear economic and fiscal outlook. Yes I know we folded Politics Live in the final sitting week of parliament but MYEFO beckons. I did hint we might be back, and boom, here we are. Boom. Yes, carrying on now.
Regular readers will require no introduction to today’s festivities, but in case you are not a hard core politics tragic, merely curious, idly exploring the interwebs at your desk at a time of year when many people are now just pretending to work in order to fill up the hours ahead of the latest work Christmas lunch before bolting home early ... welcome to Myefo.
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So what is Myefo?
Under the charter of budget honesty, the government is required to update the national economic and fiscal outlook six months after the release of the budget. As well as revising key forecasts, MYEFO accounts for all of the decisions taken since the budget that affect either spending or revenue.
It’s a little early Christmas present that lobs about this time each year, generally content rich, with bonus charts.
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What do we expect today?
MYEFO, December 2015 is not expected to be spectacular news for tidy souls who like their columns to add up and contain no red ink. Early mail suggests debt up, deficits up, growth down, and some pruning of expenditures in order to offset more than $5bn the government has spent since the budget.
Remember that “budget emergency” the Liberals used to talk about when campaigning for government? Well, two years into their term in office, it’s still with us. But the official terminology has changed now that it’s the government’s budget emergency and not Labor’s budget emergency. Now the government talks about the challenges associated with the economy rebalancing, because that’s much more soothing.
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Who, what, when, how ..
A couple of procedural things before we set the scene and then embark on the live coverage.
- The document will be in the public domain at 1pm eastern time and 10am western time.
- The treasurer Scott Morrison and the finance minister Mathias Cormann will address reporters in Perth once the material is released. The MYEFO press conference had to go west this year because Cormann’s wife is expecting a baby.
- My colleagues Lenore Taylor and Daniel Hurst are currently in the lock-up in Canberra. I’ll bring you chunky particulars from them as soon as the embargo is lifted, before mining for chunky particulars further myself and covering the reaction.
You don’t have to wait for any of us. The Politics Live comment thread is open for your business and you can find me on the twitters @murpharoo where I apparently share fan fiction and other regular insights, mainly about politics, and sometimes about my cat. These contributions are variously characterised as very helpful or not at all helpful, usually simultaneously. Feel free to join the conversation there. It’s generally a hoot.
So chop chop, let’s tune the analytical hamstrings. Refresh the teapot, help yourself to a dainty mince tart. Here comes MYEFO.
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