Abbott Government Mid-Year Economic & Fiscal Outlook 2013-14: no responsibility taken, excuses scattered like confetti, strong hints that it's the poor who will be paying the government bill

Joe Hockey spinning on live television at the National Press Club on 17 December 2013

Australian Treasurer Joe Hockey needs to grow a spine, find a political and social conscience and begin acting like an adult before he loses the nation's excellent credit rating, drives away investment, destroys industry and causes a recession with his juvenile point-scoring and loose talk.

Taking responsibility for his first 90 days in office (not the fictional 100 days) would be a good start.

On 3 September 2013 Australian Treasurer Joe Hockey stated that the Federal Labor Government was borrowing an average $83 million per day.

By 17 December 2013 the Federal Liberal-Nationals Coalition Government was borrowing on average an est. $216 million plus per day.

In the MID-YEAR ECONOMIC AND FISCAL OUTLOOK 2013-14 (MYEFO) released on 17 December 2013 Hockey admits that an increase in Abbott Government borrowings has increased Australia’s national debt:

* The increase in the expected level of net debt since the 2013 PEFO primarily reflects a higher issuance of CGS owing to an increase in the financing requirement, which is partly negated by higher yields (interest rates) than were assumed at the 2013 PEFO.

* The main factor contributing to the increase in net debt is the higher expected issuance of CGS relative to the 2013 PEFO of around $60 billion in face value terms as a result of the increased financing requirement. This is partially offset by revaluation of the projected CGS on issue of around $9 billion owing to an increase in expected yields and hence a decrease in the market value of CGS.

According to Hockey net government debt now stands at $191.5 billion in 2013-14.

Gross debt is of course higher and currently is in excess of $304.5 billion – with $216 billion of this amount being added to the total by the present Abbott Government between 18 September and 17 December 2013.

Impacting MYEFO is the inescapable fact that the Abbott Government has increased federal government spending over that outlined in its pre-election Fiscal Budget Impact of Federal Coalition Policies document, which in its turn also indicated levels of revenue which the Coalition was willing to forgo to meet its ideological requirements.

Some of the more significant components of the revenue write down apparent in MYEFO are ideologically rather than fiscally based.

The biggest one-off spending item in 2013-14 was the unplanned $8.8 billion it gifted to the Reserve Bank, a sum which coincidentally comprises over half of the budget deficit blow-out Hockey is complaining about.

Again according to Hockey, since the Economic Statement released in August 2013 the budget deficit has blown out from the predicted $30.1 billion 2013-14 deficit under Labor to a  $47 billion deficit this year under the Abbott Government.  That's a $16.9 billion difference in the bottom line primarily flowing on from Coalition policy and/or economic decisions.

However, the average voter wouldn't know it from Hockey's blaming Labor rhetoric.

BACKGROUND

The Pre-Election Economic Fiscal Outlook (PEFO) produced in August by The Treasury, for the information of all political parties and candidates prior to the 7 September 2013 election day.

MEDIA REACTION

The Sydney Morning Herald 17 December 2013:

How on Earth did we convince ourselves this bunch would be miles better at fixing the budget than the last lot?

Joe Hockey claims his midyear budget update is an honest assessment of the state of fiscal affairs he inherited from Labor. It isn't.

Rather, it is an attempt to lower expectations about the speed and ease with which the Coalition will be able to get the budget back on track.

He won't be able to achieve it for many years - he's not saying when - and not without significant and painful, but as yet unidentified, cuts in government spending. In short, he is unlikely to be able to do it much faster than Labor would have. What's likely to differ is who will bear most pain.

Labor would have erred in the direction of higher taxes, particularly on the better-off. Hockey has ruled out higher taxes and is hinting at cuts in government spending on ''welfare, education and health''.

Contrast this grim slog with all the Coalition said in opposition about the deficit being purely the result of Labor mismanagement.

This time last year Tony Abbott and Hockey were promising to deliver a budget surplus in each year of their first term. By the election campaign the return to surplus had been delayed until the first year after the next election.
Now even that is in doubt....

The Australian 18 December 2013:

JOE Hockey now has to stand up.

After gaslighting the Australian public for weeks about Labor's mess, the Treasurer has produced a horror outlook for the economy complete with the potential for a decade of deficits and a Devil's debt number of $666 billion.

Slowing growth, rising unemployment, a further decline in tax revenue and a sharper drop in mining investment are all wider economic challenges facing an Abbott government wedged between curtailing government spending and maintaining consumer and business confidence in the face of growing uncertainty. Without drastic action, the Treasurer has warned of ongoing budget deficits, rising debt and no chance of an income tax cut for 10 years....

But, having laid the blame himself with Labor, even allowing for the Coalition's own responsibility for part of the post-election deficit blowout, Hockey has to accept that he has indeed "drawn a line in the sand".

He must start providing solutions, no matter how tough....