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Myefo: budget deficit $10bn worse over four years – politics live
Myefo: Moody's says budget deficits will be greater than projected – politics live
(35 minutes later)
2.51am GMT
02:51
Chris Bowen:
This update confirms the fact that since the Liberals and Nationals came to office, debt is around $100bn higher, that’s around $4,500 for every Australian.
It confirms the fact that this government has no plan, no proper plan, well thought out plan, importantly which can pass the parliament to see our budget surplus protected.
We warned during the election campaign that the government’s forecasts were overly optimistic.
Updated
at 2.53am GMT
2.49am GMT
02:49
Labor: surplus is wafer thin and could be fixed by dumping the corporate tax cuts
Labor’s Chris Bowen is up now with the finance shadow, Jim Chalmers.
We welcome the fact that the surplus will be projected to continue for 20/21, however, it is a wafer-thin surplus, subject to any changes in the budget parameters that are, that would be further announced. It is a wafer-thin surplus which could be blown over by the slightest breeze. Now, the fact of the matter is that there could be a better way. The surplus for 20/21 could be around $4bn better if the government dropped their big business tax cuts and adopted Labor’s sensible plans for negative gearing and capital gains tax reform.
Updated
at 2.54am GMT
2.44am GMT
02:44
#MYEFO statement from Moodys on Australia's AAA rating #auspol pic.twitter.com/d2NDNcjGXH
2.42am GMT
02:42
Moody's expects budget deficits to be bigger than government projections
Moody’s has issued a statement that questions the government’s Myefo statement. I will give the full statement in a minute.
Here is the key sentences:
Although progress has been made since the budget in implementing fiscal consolidation measures, this has been achieved mainly through appropriations and regulations. Legislating fiscal consolidation measures remains challenging.
As a result, we expect that the budget deficits will be somewhat wider for longer than currently projected. Gross general government debt will rise in the next couple of years to rise to around 42% of GDP in our projections. This is broadly in line with the median level of AAA-rated sovereigns.
Updated
at 2.49am GMT
2.33am GMT
02:33
BREAKING: Moody's says expects budget deficits to be bigger than revealed in #MYEFO...
2.33am GMT
02:33
Abbott Hockey Asset Recycling Fund dumped
The end of the Arf.
This was the fund that would have provided incentive payments to state and territory governments that sell assets and use the proceeds to build “nation-building infrastructure”.
Q: Can I ask about the Assets Recycling Fund? It was a rather miserable end for Joe Hockey’s centrepiece for 2014. What leverage are you going to use on States to privatise and the like?
Just on the second question, the Asset Recycling initiative was a roaring success but what has turned out to be the case is that because the Senate wasn’t prepared to legislate the establishment of the Asset Recycling Fund, given we were able to fulfil our commitment without setting up a specific fund. I would not agree with your characterisation there.
Elsewhere, Tony Abbott has yet to comment. He is on a peace and love trip with Bill Shorten.
Peace in the Middle East. @billshortenmp @TonyAbbottMHR @TimSmithMP Australia Israel UK Leadership Dialogue #auspol pic.twitter.com/prw3GtZRqw
2.22am GMT
02:22
Tony Abbott nanny childcare program dumped
Tony Abbott’s so-called nannies pilot – the interim home-based carer subsidy program – has been dumped.
The numbers in the pilot will be slashed from 3000 to 500 – a cut that will receive a saving of $170.4m over two years.
The government says there has been little take up of the pilot program, which aimed to subsidise nanny childcare for 10,000 kids. So while existing participants will be funded until it closes in June 2018, no new nannies will be funded.
It was heralded as the first big thing in the second Abbott childcare package of 2015, which followed the first big rolled gold signature childcare package which did not survive the partyroom.
Scott Morrison announced the measure initially as social services minister in 2015.
Key workers such as nurses, police officers, ambulance officers and firefighters, as well as other shift workers, are too often unable to access childcare and take advantage of government support because of the nature and hours of their work.
The same is often true for families in rural and regional areas and those who have children with special needs, for whom mainstream childcare services are often inaccessible, lack the necessary flexibility or do not cater for their specific needs.
Updated
at 2.28am GMT
2.13am GMT
2.13am GMT
02:13
02:13
Let’s move on to the details of some key changes, some of which we knew about.
Let’s move on to the details of some key changes, some of which we knew about.
The Green Army is cactus.
The green army is cactus.
The government will cut the program, worth $224.7m over four years.
The government will cut the program, worth $224.7m over four years.
Existing contracts will be funded.
Existing contracts will be funded.
The majority of savings will be directed towards other programs with a bit for budget repair.
The majority of savings will be directed towards other programs with a bit for budget repair.
Updated
at 2.29am GMT
2.02am GMT
2.02am GMT
02:02
02:02
OK the press conference has wrapped with the treasurer’s well known homage to the Australian singer Tina Arena.
OK the press conference has wrapped with the treasurer’s well-known homage to the Australian singer Tina Arena.
We have measures of Parliament which need the approval of partners to ensure future generations aren’t saddled with bad debt.
We have measures of parliament which need the approval of partners to ensure future generations aren’t saddled with bad debt.
Bad debt paying for welfare payments of today through higher taxes on people in the future. That’s not the way we want to go.
Bad debt paying for welfare payments of today through higher taxes on people in the future. That’s not the way we want to go.
So we are delivering on those commitments. We will continue to do that in the new year as we work towards next year’s Budget.
So we are delivering on those commitments. We will continue to do that in the new year as we work towards next year’s budget.
On that note, can I wish you all a very merry Christmas. Tina Arena I don’t think has a Christmas CD out this year, which is a great disappointment to me.
On that note, can I wish you all a very merry Christmas. Tina Arena I don’t think has a Christmas CD out this year, which is a great disappointment to me.
I will have to go back to the old ones. I hope your families have a safe and Merry Christmas.
I will have to go back to the old ones. I hope your families have a safe and Merry Christmas.
Updated
at 2.29am GMT
1.54am GMT
1.54am GMT
01:54
01:54
Govt confirms the 15-16 MYEFO plan to change pathology bulk-bill arrangements has been deferred for "further consultation" - #MYEFO
Govt confirms the 15-16 MYEFO plan to change pathology bulk-bill arrangements has been deferred for "further consultation" - #MYEFO
1.53am GMT
1.53am GMT
01:53
01:53
Our neighbour Shane Wright of the West Australian:
Our neighbour Shane Wright of the West Australian:
The govt still has $205 million in savings for 16-17 to announce #MYEFO
The govt still has $205 million in savings for 16-17 to announce #MYEFO
1.52am GMT
01:52
James Massola of Fairfax asks why Australians should believe Morrison on a return to surplus in 2020-21 given the past three treasurers have promised a return to surplus.
Morrison says this:
First of all, it is a projection of 2021. I’d note that.
Second of all, what are the things government controls? What a government controls is what it spends and taxes in decisions of its own making.
As the finance minister and I have made clear today, we have, in this statement, as in the other statements we have handed down together, increased the bottom line position for the government when it comes to net policy decisions. You see, the demonstration of the government’s resolve to take the budget forward.
It is a projection, people. Don’t bet your house on it.
Updated
at 2.03am GMT
1.48am GMT
01:48
Scott Morrison is asked about a specific cut and I will get to more of individual measures in a minute as we go through the details once the Morrison-Cormann presser is over.
Q: Can you explain the $330m cut in wages subsidies for workers over 25 and the $120m skills fund that’s been axed? How does that accord with your job creation policies?
This change announced in Myefo effectively caps the amount of funding available in a wage subsidy pool for anyone 25 and older.
Morrison makes these points:
Updated
at 1.51am GMT
1.39am GMT
01:39
How can we be confident of returning to surplus in 2020-21 when the figures are so volatile? Morrison returns to Wayne Swan.
Wayne Swan was the one who stood up in the parliament and said ‘the four years of surpluses we deliver tonight’. You haven’t heard that from me, you haven’t heard it from the prime minister or the finance minister. It was the Labor party who overegged on these things. What we do is, I think very prudently, and I think, as you see in this document, very transparently, is set it all out.
Updated
at 1.42am GMT
1.36am GMT
01:36
Scott Morrison is asked first up about the possible downgrade of Australia’s triple-A rating. He refuses to whinge about a possible downgrading but then says Australia is regularly getting assessed through the bond market.
We are getting three to four times coverage on our debt and if you look at the movement in yields of Australian Treasury bonds versus US Treasury bonds, you see a bit of a narrowing of the gap, which means we are getting better prices.
How long-lived that is, we will see, but the point is that when those who actually make the purchases on Australia’s debt – hedge funds, sovereign wealth funds, the central banks of other countries and others – when they are making their own independent assessments of Australia, they are buying. They’re buying.
Updated
at 1.43am GMT
1.33am GMT
01:33
Scott Morrison to parliament: get with the program
The treasurer ended his statement with an appeal to be positive, Australia.
Just in wrapping up, this statement supports a growth-friendly economic set of policies and, notwithstanding the reasons for optimism that exist, it reminds us of the need to clear any fog of unreality about the scale of the fiscal and economic challenges we face as a nation and the need for partners in the parliament to support government efforts to restore the budget to balance.
When we look at particularly the issues of Australia’s international standing on debt and our performance vis-a-vis other countries, with growth rates at 2%, at the top end of the scale for advanced and AAA-rated economies and an improving global outlook as the statement sets out and continuing evidence that the Australian economy is successfully transitioning from the mining investment boom, there is reason to be positive and optimistic.
It is not surprising that, despite the deficit and debt legacy which was left to us by the previous government, in the advances we have been able to make, we continue to stand strongly in international debt markets and we continue to perform well in meeting our external financing commitments. This is evidenced by the success of our bond offering and the performance of our Treasury bonds.
Australia continues to be well supported and rated by international debt markets re-enforcing our global reputation and standing as a secure place to invest. The statement provides a responsible, conservative and transparent update of the Australian government’s fiscal position and optimistic but very realistic outlook on our future economic performance.
Updated
at 1.44am GMT
1.27am GMT
01:27
The Kouk is talking a 60-year high.
Net govt debt forecast to hit a 60 year of 19.0% of GDP in 2018-19
Importantly, the net impact of policy decisions made by the government, including fully funding all election commitments, has been to improve the budget by $2.5bn over the forward estimates. With net improvements of more than $2bn in payment savings and just under net $500m in increased revenues, in each and every year of the budget and the forward estimates, net policy decisions of the government have improved the budget bottom line including net payment savings in each and every year.
Once again, the government has demonstrated we do not spend more than we save. And that the predominant mechanism for restoring the budget to balance is by getting expenditure under control. By contrast, the net effective of Labor’s policy decisions at the last election was to increase the deficit by $16.5bn.
If Labor was standing at the podium ...
This means that, under Labor, this statement would have been at least $16.5bn worse off today and as much as $19bn worse off when you take into account the improvements the government has made of some $2.5bn on our net policy decisions.
Updated
at 1.27am GMT
1.19am GMT
01:19
Scott Morrison is speaking now.
In MYEFO, once again, the budget is projected to return to balance in 2021. The underlying cash deficit is now expected to narrow from $36.5bn, or around 2.1% of GDP in2016-17, and that is down on the $37.1bn in the budget and the pre-election economic and fiscal outlook to $10bn or half a percent of GDP in 2019-20.
The average annual pace of fiscal consolidation is 0.5% of GDP over the forward estimates period. That is consistent with previously reported trajectories. Since PEFO, the total effective parameter and other variations has been to negatively impact the budget by $12.8bn.
This includes a $30.5bn downward revision to revenue, driven principally by weaker wage and profits growth and weaker tax collections offset by reduced payment estimates.
Updated
at 1.26am GMT
1.13am GMT
01:13
Good afternoon blogans and welcome to Mad Myefo Monday, where too much pre-Christmas excitement is never enough.
The midyear economic and fiscal outlook statement (Myefo) has been delivered.
As expected, the underlying cash deficit this year has come in at $36.5bn – compared with $37.1bn reported in the budget and the pre-election economic and fiscal outlook (Pefo).
But, over the forwards, the deficit has worsened $84bn in the budget to $94.9bn. The government expects debt to peak lower at 19% of GDP but a year later, in 2018-19.
In a statement the treasurer, Scott Morrison, and the finance minister, Mathias Cormann, announced revenue dropping $30.5bn – “driven principally by weaker wage and profits growth and weaker [tax] collections”.
But the statement has wage price index projections up from 2.1 in 2015-16 to 3.25 in 2018-19 and 3.5% in 2019-20.
Pretty confident really under the circumstances.
The Myefo still contains the so-called zombie measures from the Abbott-Hockey 2014-15 budget, worth $13.2bn.
I will keep dribbling out more figures and initiatives as we go.
But, as we sat down, a statement was placed in front of us regarding the Australian Securities and Investments Commission (Asic) registry.
It said the after a “thorough evaluation” of the final private-sector bids to essentially privatise the Asic registry functions, the government would not be proceeding with the deal.
The reason? That the bids, delivered through a competitive tender process, did not deliver a “net financial benefit” for the commonwealth.
The government said, thanks very much to everyone who participated. And the learnings would feed into the “future approaches” to registry functions.
