Tony Abbott won’t say when the nation’s balance sheet will return to surplus but insists the 2015 budget to be brought down next week will “show steady progress in the right direction” as new forecasts predict deficits blowing out by $47bn over the next four years.
The prime minister said his government had “never put a date” on a return to surplus, because “I think the Australian people got pretty sick of having the Labor party announce with great fanfare a date for return to surplus which was never actually fulfilled.”
Abbott has said this year’s budget, now to be finalised at a cabinet meeting delayed until Thursday, will be “pretty dull”. The government is aiming for a political and economic reset after the rejection of deep cuts it proposed last year, with cautious spending and offsetting savings that do not hit household budgets.
But declining commodity prices, combined with the political deadlock over last year’s proposed savings, will result in this year’s deficit coming in at almost $46bn, $5.5bn worse than predicted in the December budget update, according to Deloitte Access Economics’s annual budget monitor.
It forecasts the 2015-16 deficit will be $5.3bn ($14bn worse) and predicts a deterioration of $14.5bn in 2016-17 and $12.6bn in 2017-18.
“Australia’s commodity boom isn’t just tailing off, it’s starting to look like a bust,” said Deloitte Access Economics partner Chris Richardson.
Asked about the forecasts, Abbott said that “obviously there are some headwinds overseas”.
“We have got slower growth than was expected in some of our trading partners. We’ve got a much lower iron ore price than was expected even at [the time of the mid year budget update].
“What hasn’t changed, though, is the determination of this government to get the budget back under control, to build on the success of last year’s budget and to make it absolutely crystal clear that there is a credible path back to surplus.”
But according to Richardson, “the wheels are falling off because the Chinese economy is slowing and commodity prices are falling and because the parliamentary gridlock means governments have been unable to do anything about it”.
He joined a growing push for the government to consider savings from the revenue the government forgoes due to the generous treatment of superannuation savings – $30bn in 2014-15 and forecast to rise to close to $50bn in 2017-18.
