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Tony Abbott Responds To Mid-Year Budget Update

Tony Abbott has described the Mid-Year Economic and Fiscal Outlook as a “crisis mini-budget.”

Speaking at a joint press conference with Shadow Treasurer Joe Hockey and Shadow Finance Minister Andrew Robb, Abbott claimed there is now no buffer against international economic problems because of the incompetence of the government.

  • Listen to Abbott, Hockey and Robb (19m)
  • Watch the press conference (12m)

Transcript of joint press conference with Leader of the Opposition Tony Abbott, Shadow Treasurer Joe Hockey and Shadow Finance Minister Andrew Robb.

TONY ABBOTT: Today the Government has finally admitted what the Coalition has been saying for months. Namely, there is a crisis in Europe, there is a global economic slowdown and it will impact on Australia. I want to make the fundamental point that this is a government which is imperilling our ability to respond to this global problem. It is imperilling our ability to respond to this very serious set of international economic numbers.

This is a government which is making a bad situation worse with its new taxes and with its continuing waste. There is no good time to introduce bad taxes but this is the worst possible time to be introducing a carbon tax and a mining tax which are going to damage Australia’s international competitiveness.

This is a government which is continuing to waste the taxpayers’ precious dollars. We’ve seen the pink batts disaster which has become a byword for government incompetence, where they spent more than $1 billion putting pink batts into roofs and then spent $1 billion taking them out again. We’ve seen the school halls which this government couldn’t build without rip-off after rip-off and now of course, the daddy of them all, the National Broadband Network which we learned yesterday is going to cost $15 billion, at least, more than the Government is telling us.

There is now no buffer against international economic problems because of the policies and the incompetence of this government. Under the former government we had a $20 billion surplus, we had $70 billion worth of net assets. That has been completely blown because of the policies and the incompetence of this government. We have now seen the four biggest deficits in Australian history delivered by Wayne Swan. There’s the claim of a tiny, wafer-thin surplus next year – a surplus which is just 0.1 per cent of GDP and is obviously hostage to international events and of course we’ve seen the debt blow out and out and out and today we have the revelation that the debt is not $107 billion, but well over $130 billion.

The final point I want to make before throwing to Joe and then to Andrew is that we saw in the parliament last week a Prime Minister who would do whatever it takes to make her parliamentary numbers stack up but today we’ve seen a Prime Minister who will do whatever it takes to make her budget numbers stack up. But frankly, they don’t stack up. They are just not believable and I’m now going to ask Joe to elaborate on those points.

JOE HOCKEY: Thanks very much, mate. The Government claims that it is being responsible with spending. The numbers today reveal that they are increasing government expenditure by $11 billion over the forward estimates, in six months since the budget was announced. $9 billion of that increase in expenditure is coming from their own policy decisions. The Government claims that Europe is having an impact on their revenue and yet they’re only revising down revenue by $9 billion over four years and that represents just .6 of one per cent of revenue that they claim will be lost because of the economic downturn.

The fundamental point is you have to look at what Labor does, not what they say. They claim that they are going to have the biggest fiscal consolidation in modern history and yet the budget deficit this year is blowing out by $15 billion. Now, in 12 months alone the budget deficit has tripled in size. So, they are expecting us to believe that they are going to have a $38 billion turn around in the budget in 12 months in the face of slower economic growth in Europe, slower economic growth in China and an anaemic United States economy. They expect us to believe that they will deliver a miraculous surplus even though they are increasing their own expenditure by their own policy decisions and even though they think the revenue implications of the deteriorating world are going to be less than one per cent of total expenditure.

That’s one of the reasons why the numbers are unreal. When it comes to the savings measures, one of them at least involves the mining tax and having failed to even get the mining tax yet through the Senate they’re already changing the budget estimates of the revenue by half a billion dollars and changing the expenditure as well, deferring one of the key expenditure initiatives associated with it for 12 months. So, there are a number of issues, particularly on the expenditure side, that suggest that what the Labor Party is doing: it’s fiddling the numbers to give the appearance of a budget surplus, a budget surplus that is beyond the realm of possibility when you look at what the Labor Party actually does and not what they say.

ABBOTT: Andrew?

ANDREW ROBB: Thanks, Tony. Not only is this budget making us far more vulnerable if there’s a meltdown in Europe but the fact is, as Joe was implying, this surplus, this supposed surplus next year, it’s a hoax. It is a hoax and it is a part of the sort of political trickery that I think people are getting well and truly sick of.

I just want to give you a few examples to show this surplus next year is a hoax. They have brought forward expenditure from ‘12-13 to this year, or in many cases they’ve deferred expenditure to the following year, to create this illusory surplus or something close to a surplus. I’ll give you some examples. Labor’s energy security and transformation spending will be just over $1 billion in 2011-12, this year and in 2014-15 it will be $1 billion but in ‘12-13, the middle year, $1 million. So, a billion either side, one million in the middle.

I’ll give you another one, Labor’s coal sector jobs package will spend this year $222 million. It will spend, next year, the so-called surplus year, it will spend nothing and then again in the following year, the following two years, it will spend over $230 million. So, again, this is a total fabrication just to create the illusion of a surplus.

They’re pre-paying the clean energy advance household assistance payments, which is $1.4 billion. Now, that’s more than the supposed surplus in one measure. With their land and biodiversity measures it will involve spending of around $500 million in 2013-14 and 2014-15 but only $131 million in 2012-13.

Also, they have announced that they will be able to advance the option of 15 million tonnes of carbon permits for each year of the flexible price period. So, in other words, next year they can bring forward the sale of 15 million permits for 2015-16, for 2016-17, for 2017-18, you can go on. They could do five years. They could do up to $2 billion worth of sales which they can bring forward and so that could feature as revenue in 12-13 even though it is sales, advanced sales.

They’ve brought forward the expenditure – in fact, Albanese, last week, made a big song and dance in the parliament about bringing forward infrastructure expenditure for New South Wales, Queensland and South Australia, into this year from ‘12-13 and that’s 80 per cent. There’s $1.2 billion. So, it’s 80 per cent of the surplus. So, on so many of these different measures they’ve either brought it forward or delayed it to create the impression.

Now, on top of that there is no figure for foreign aid. They’ve promised to go to 0.5 of GDP. There is no allocation for that in the forward estimates. Julia Gillard’s made a big song and dance, even in the last three or four days, about the disability insurance scheme and how her government would be great supporters of that and it was a great priority. There’s nothing in the next four years allowed for that. Bear in mind, that’s a six to $7 billion programme a year. So, over forward estimates that’s nearly $25 million of expenditure. There’s not one cent in these forward estimates. There’s no defence increase. Where’s the money for the submarines? Again, a big song and dance about those things, and there’s no allowance for aged care. So again, Productivity Commission reports, great expectations being created in a sector – look forward to the next four years, not a cent. Not a cent in this budget.

So, what we’re seeing again is trickery. This surplus is a hoax and in many ways they have brought forward expenditure from next year into this year and increased the debt this year. In other words, they will borrow next year’s surplus this year and we’ve seen this dramatic jump in the net debt. In six months, the net debt has now jumped $74 million a day, every day, for the rest of this year because of the bringing forward of expenditure from next year.

ABBOTT: Ok. Any questions?

QUESTION: Isn’t the Government doing what most people do which is readjust their spending and savings according to the circumstances? You talk about the National Disability Insurance Scheme. Doesn’t that make sense not to include that in the forward estimates when you haven’t actually developed the scheme? I mean, you put that on the budget when you know what it’s going to be, don’t you? You don’t have it on something when you don’t know what the [inaudible]…

ABBOTT: The basic point Andrew is making is that the Government cannot commit to these things as it has, not put them in these figures and expect people to believe that there will be a surplus. But the fundamental point I make is there is a crisis, it will impact on Australia and yet the Government is reducing our ability to cope with its continuing waste and its big new taxes. If the Government was serious about protecting Australia against the developing global economic storm, they would be rescinding the carbon tax, they would be rescinding the mining tax and above all else, they would be ending these wasteful programmes such as the National Broadband Network.

QUESTION: What’s your view of the cut to the Baby Bonus?

ABBOTT: Well, the Baby Bonus was means-tested in breach of a clear pre-election commitment by this government. I think that this is a rip-off of the forgotten families of Australia. Let’s not forget that the Baby Bonus is there to help stay at home mums and I think this is a government which has never had much respect for the stay at home mums of Australia. Now, I am going to respond in due course to the particular savings initiatives that the Government has announced. I note that the biggest savings initiative is essentially a lift from the Coalition’s policy at the last election – a policy that was pilloried up hill and down dale by the government at the time – but I’m not going to specifically respond to these savings measures because, let’s face it, the Government has had weeks to work on them. We’ve only just had them for a couple of hours.

QUESTION: What about what the OECD has had to say about the Government’s fiscal strategy? What’s your view on that? Surely it’s high praise.

ABBOTT: Look, to the extent that our situation is superior to that of other countries, that is due to the reforms of previous governments, not to the spending spree of the current government. Now, as that great economist Adam Smith said, there is a lot of ruin in a country, but this government has damaged the economic fundamentals of Australia. The Hawke Government, the Keating Government, the Howard/Costello Government reformed our economy, made us the envy of the world. This government has damaged our economy and the damage continues. The damage continues with the announcements today.

QUESTION: What about the credit ratings, though? Not even the Howard Government had three AAA credit ratings.

ABBOTT: The point I am making is that, sure, compared to some other countries, Australia looks good but it is the reforms of previous governments, not the policies of the current government which is responsible for our strengths. If you actually look at the fiscal situation of three key economies: in the United States there has been a seven per cent of GDP fiscal deterioration since the global financial crisis; in the United Kingdom there has been a six per cent of GDP fiscal deterioration since the start of the GFC and in Australia, there has been a five per cent deterioration notwithstanding the fact that we haven’t had a significant rise in unemployment and notwithstanding the fact that we haven’t had a banking crisis. So, Wayne Swan’s fiscal management has been no better than that of the Americans and the British. If our overall fiscal situation remains somewhat stronger, that has far more to do with Peter Costello and John Howard than it does with Julia Gillard and Wayne Swan.

QUESTION: What do you make of the independent review on the Christmas Island [inaudible]?

ABBOTT: Well, look, I’m here to talk about the crisis mini-budget and, if you don’t mind, I’ll focus on the crisis mini-budget but it is interesting that the Government has effectively abandoned the Malaysian people-swap even though – thanks to the chicanery in the parliament last week – the Government should now have the numbers to get it through the parliament. It has effectively abandoned it and I think the reason why they have abandoned it is because they know that not withstanding gaining a vote through the manoeuvre over the speakership, they can’t count on their own members of parliament to support what I’ve been saying all along is a dud deal for Australia and a cruel deal for bat people.

QUESTION: Do you think Wayne Swan should just give up the pretence of trying to secure a surplus for next year and just admit that things are a more dire than they expected and just go with the flow?

TONY ABBOTT: I think it’s very important for confidence in this country that the Government does actually deliver a surplus. I think it’s very important for confidence in this government, in particular, that just for once it does deliver on a promise. Now, I am extremely doubtful that he ever will deliver on a surplus. This is a Treasurer who has been much better at forecasting surpluses than delivering them. But nevertheless I think it is critical for Australia’s international economic standing for him actually to deliver and frankly the weakness of the numbers that we’ve seen today – the general shakiness inevitable under these circumstances of the forecasts on which that wafer-thin surplus is based – makes me think that if he really is fair dinkum about delivering it, today’s crisis mini-budget will be the first of many.

Thank you.

Liberal Party statement on MYEFO.

MYEFO: Labor’s Economic Failure

The Government’s Mid Year Economic and Fiscal Outlook (MYEFO) is another con job that confirms Labor’s promises on the economy cannot be believed.

Labor is all talk and no action when it comes to delivering a Budget surplus. This year was meant to be the year of decision and delivery. Instead it’s been a year of economic confusion, wasteful spending and failure to deliver.

Wayne Swan is asking Australians to believe him when he says he can turn a $37 billion deficit into a surplus in just one year.

The $22 billion deficit this year has deteriorated by $15 billion in MYEFO, yet Mr Swan says that despite economic turmoil in Europe and a downturn in China, we’ll be back in the black in 2012.

The wafer thin forecast surplus for 2012-13 does not leave Australia prepared for future economic shocks.

This Government is attempting to use Budget gymnastics and accounting trickery to give the impression of a Budget surplus that is actually a mirage. Australians won’t be fooled by this weak and incompetent Treasurer.

Labor talks about delivering surpluses but the record shows they have not produced a surplus in 21 years, since 1989-90.

This statement is typical of Labor’s reckless approach to economic management. Spending is up $11 billion over the forward estimates, taxes are up and peak debt is set to soar to $136 billion. Australians are now borrowing $100 million every day and are paying $100 million every week to fund Labor’s debt fuelled wasteful spending spree.

This MYEFO has been written by a Treasurer and a Finance Minister who can’t be trusted. It is not worth the paper it is written on. The Government has failed to explain where the money is coming from to pay for the black holes in its carbon tax and mining tax and the $50 billion dollar NBN remains off-budget.

Instead of being honest with the Australian people, Labor is trying to deceive them by not giving all Australians the true picture.

This is a confused statement from a Treasurer clearly out of his depth. Mr Swan promised deep cuts to spending, but failed. The Treasurer is reverting to type and reaching for higher taxes and higher spending.

Responsible economic management is not in Labor’s DNA.

Australians deserve better that this chaotic approach to government.

Australians are looking for stability and certainty from their government, not this weak, confused and directionless approach.

The Coalition delivered surpluses in 10 out of 12 budgets and left this government with a $20 billion budget surplus. In just four years, $45 billion in the bank has turned into $136 billion in debt. This Government has delivered four consecutive budget deficits totalling $167 billion in four years.

The Coalition will return stability, certainty and competency back to government. We will build a stronger and more resilient economy.

Most importantly, the Coalition will live within its means.

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Malcolm Farnsworth
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