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Myefo: Moody's says budget deficits will be greater than projected – politics live
Myefo: Moody's says budget deficits will be greater than projected – politics live
(35 minutes later)
4.33am GMT
04:33
Updated
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4.25am GMT
04:25
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4.23am GMT
04:23
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4.16am GMT
04:16
Richard Di Natale, Greens leader:
There is one message in this Myefo for everyday Australians: unless you’re a big corporation or Liberal party donor, you don’t matter.
Malcolm Turnbull’s plan to hand out tax cuts to the wealthiest Australians while wage growth remains stagnant is a slap in the face to ordinary Australians doing it tough.
There is nothing in the Turnbull government’s economic program that addresses the major risks to the economy from the housing bubble or that eases the growing gap between the rich and everyone else.
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4.13am GMT
04:13
Standard & Poors: We remain pessimistic ... but no immediate effect on ratings
An statement from S&P Global:
Global Ratings said today that the Australian government’s midyear budget update has no immediate effect on the credit rating or outlook on the commonwealth of Australia (unsolicited ratings AAA/Negative/A-1+).
The government’s worsening forecast fiscal position, as outlined in its latest budget projections earlier today, further pressures the rating.
We remain pessimistic about the government’s ability to close existing budget deficits and return a balanced budget by the year ending 30 June 2021.
Over the coming months, we will continue to monitor the government’s willingness and ability to enact new budget savings or revenue measures to reduce fiscal deficits materially over the next few years.
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4.03am GMT
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04:03
04:03
Message for Govt: Stop blaming Parliament for not passing unfair zombie measures and take the lead by find'g common ground @cassandragoldie
Message for Govt: Stop blaming Parliament for not passing unfair zombie measures and take the lead by find'g common ground @cassandragoldie
4.03am GMT
4.03am GMT
04:03
04:03
This is lazy policy making, going for easy targets, mainly low income earners, with no structural reform plan for nation: @cassandragoldie
This is lazy policy making, going for easy targets, mainly low income earners, with no structural reform plan for nation: @cassandragoldie
4.03am GMT
4.03am GMT
04:03
04:03
The govt has stubbornly kept $7bn in unfair zombie cuts that have no hope of passing Parliament: @cassandragoldie pic.twitter.com/2sbBNOsOIi
The govt has stubbornly kept $7bn in unfair zombie cuts that have no hope of passing Parliament: @cassandragoldie pic.twitter.com/2sbBNOsOIi
4.00am GMT
4.00am GMT
04:00
04:00
The Business Council of Australia’s Jennifer Westacott says Myefo underlines that Australia can continue to muddle along and “sleepwalk into lower living standards” or seize the opportunity to deliver a stronger budget.
The Business Council of Australia’s Jennifer Westacott says Myefo underlines that Australia can continue to muddle along and “sleepwalk into lower living standards” or seize the opportunity to deliver a stronger budget.
Why?
Why?
The MYEFO update makes it clear we must intensify efforts to meet the twin budget objectives of reducing the rate of growth in spending and accelerating economic growth. This means continuing to redesign major spending programs to improve the quality of spending, cut waste and deliver better value for taxpayer dollars. At the same time, we must better equip the economy to support jobs and prosperity.
The MYEFO update makes it clear we must intensify efforts to meet the twin budget objectives of reducing the rate of growth in spending and accelerating economic growth. This means continuing to redesign major spending programs to improve the quality of spending, cut waste and deliver better value for taxpayer dollars. At the same time, we must better equip the economy to support jobs and prosperity.
Politicians must move on from the phony, dead-end argument that supporting growth comes at the cost of fairness. Growth and fairness go hand in hand because growth creates economic opportunity.
Politicians must move on from the phony, dead-end argument that supporting growth comes at the cost of fairness. Growth and fairness go hand in hand because growth creates economic opportunity.
Only economic growth can create jobs, higher wages and the revenue to pay for the health, education and welfare services Australians value.
Only economic growth can create jobs, higher wages and the revenue to pay for the health, education and welfare services Australians value.
And only economic growth can ensure this country becomes more capable each year of caring for all of its citizens, no matter what their circumstances.
And only economic growth can ensure this country becomes more capable each year of caring for all of its citizens, no matter what their circumstances.
We can no longer afford to ignore or be complacent about this reality.”
We can no longer afford to ignore or be complacent about this reality.”
3.51am GMT
3.51am GMT
03:51
03:51
Increase in parliamentary staff costs about $9.1m a year for 33 positions, or about $275,000 for each job.
Increase in parliamentary staff costs about $9.1m a year for 33 positions, or about $275,000 for each job.
3.50am GMT
03:50
Pull in your belt, except politicians
The government has set aside another $35.8m over four years to increase personal staff allocations by 33 for all MPs and senators across the parliament .
The government will spend an $8.1m for a third staffed electorate office for members with electorates larger than 350,000 square kilometres.
3.42am GMT
03:42
The same-sex marriage plebiscite of course, failed to proceed through the parliament.
The government has booked a saving of $154m.
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3.37am GMT
03:37
Economist Stephen Koukoulas has written on the Myefo. Here is a kernel.
In addition to blowing the budget deficits out by tens of billions of dollars a year, Morrison has pushed out the return to surplus to 2020-21, some two years later than Hockey and is now forecasting net government debt to reach a 60-year high of 19% of GDP. Recall that 1% of GDP on 2020 dollar terms is about $20bn.
The question now is not whether the ratings agencies will downgrade Australia but whether there will be numerous downgrades over the next few years.
The curious thing about the debt and deficit widening of the last few years is that it has been driven by a rise in government spending together with a shortfall in revenue.
Government spending as a share of GDP under the Morrison Myefo forecasts is projected to be 25.2% of GDP in both 2016-17 and 2017-18, respectively, compared with the Hockey 2014 estimates of 24.7% and 24.8%, respectively. Accordingly, government spending is an average 0.5% of GDP higher each year than projected by Hockey.
At the time of the 2014 budget, government revenue as a proportion of GDP was forecast to be 24.4% in 2016-17 and 24.9% in 2017-18. The Morrison Myefo forecasts are for revenue to be 23.3% and 23.8%, respectively, a shortfall of an average 1.1% of GDP in each year.
Morrison has failed to address either spending, which is significantly higher than in the 2014 budget, nor revenue, which is clearly lower.
3.26am GMT
03:26
So while revenue coming into government has dropped, there has also been a drop in what the government pays out.
The drop in government payments is due partly to the following factors:
Why? I have no answers as yet but I am seeking them. Any ideas, let me know.
Updated
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3.10am GMT
03:10
The Labor finance shadow, Jim Chalmers, rejects suggestions the opposition should chip in and support government savings measures more. He says the government could dump the $50bn corporate tax cuts with a stroke of a pen if it wants to really repair the budget.
No opposition in recent memory has put more effort into proposing alternative savings when we oppose the savings the government has put.
We took $130bn worth of savings to a federal election, which is unheard of in this country.
The effort that we put into proposing alternatives when we won’t cop smashing Medicare or we won’t cop smashing the most vulnerable people in this country to repair the budget. We believe in budget repair that’s fair. We have pitched up those alternatives for that reason because we do think there’s a better way.
Both sides agree that we need to fix the mess that the government has made of the budget. We think there’s a better way to do it.
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3.06am GMT
03:06
Chris Bowen is asked, if Labor would reconsider supporting some of the government’s measures to repair the budget.
It was a theme of Scott Morrison’s presentation that he needs “partners in parliament”.
Moody’s also made the point that legislating savings measures remains “challenging”.
But Bowen says Labor had a responsibility to its own voters.
The treasurer was boasting a few minutes ago he passed two-thirds of the government’s savings objectives, that’s right.
That’s with our support. Some of them are our ideas, which they then adopted. So we have shown that we can work with the government in the parliament to pass sensible savings measures, the treasurer himself said two-thirds has been passed. Yep and that was with, by and large, our support.
But what we won’t do is sell out those Australians who voted for us and rely on us to protect them. We won’t say that it’s OK for unemployed people to wait an inordinate amount of time for basic support. We won’t say it’s OK that Australians should have the highest pension age in the world. We won’t say it’s OK because it’s not OK.
Updated
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2.58am GMT
02:58
From AAP, reaction from the ACTU:
Trade unions say the government still refuses to acknowledge it has a revenue problem and continues to squib tax reform.The ACTU secretary, Dave Oliver, criticised the prime minister, Malcolm Turnbull, for delivering spending cuts that hit ordinary Australians, as well as presiding over an economy in reverse.“Mr Turnbull could give all Australians some good news ahead of Christmas and outline a plan for growth based on more well-paid, secure jobs,” he said.
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2.58am GMT
02:58
From AAP, reaction from the business sector:
Business believes the midyear budget update is a fresh reminder for parliament to work together to get the nation’s finances back in the black.The review, released on Monday, shows the bottom line worsening over the next three years but still with an expectation of a return to surplus by 2021.“The opposition and crossbenchers share with the government responsibility for the slow progress in balancing the budget and reducing the intergenerational burden of deficits,” Australian Chamber of Commerce and Industry CEO James Pearson said.Pearson praised treasurer Scott Morrison for avoiding the temptation to reach for “economy-crushing” tax increases.“It was now clear a young Australian born in 2008 may need to wait until their teenage years before they experience a budget surplus,” he said.“Prolonged budget deficits mean long into their adulthood, that child will be paying the price for the collective reluctance of our current generation of politicians to make the tough decisions needed to curb spending.”
Updated
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2.56am GMT
02:56
Labor finance shadow Jim Chalmers calls the statement a triple-F performance from the Coalition.
If Australia loses its coveted AAA rating, that means, that means higher costs for families and small businesses right around the country.
Now higher mortgage repayments would be a steep price for Australians to pay for this treasurer and this government’s incompetence. They promised that they would fix the budget and they promised jobs and growth. Instead we got bigger deficits, we got a shrinking economy and we have got those full-time jobs disappearing. They have delivered precisely the opposite of what they promised that would deliver.
Updated
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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.
