Wednesday, 18th December 2013

WHAT SORT OF MEDICINE, JOE?

It is time to "draw a line in the sand," said Hockey. He was revealing "the true state of the books." Future growth and revenue have been forecast down, employment and debt up, and spending is blowing out. It's a new economic paradigm.

Yesterday's MYEFO statement was an exercise in getting out all the bad news in order to soften up the electorate for a tough May budget. As Annabel Crabb put it, "Every shameful kilo of excess spending, every lapse in discipline has been piled into this mid-year economic forecast in an effort to compose the most confronting 'Before' photo in the nation's economic history." By May, the government hopes, Australians will be fairly begging for their medicine, no matter how bitter.

The tensions in its plan are these: Having made the case so strongly for the need to change direction, is it politically feasible to spend the next six months repeating the same message, but not acting on it? As Hockey himself said, "Doing nothing is not an option," yet he unveiled no major new measures yesterday to improve the budget position, and has no plans to until May.

Secondly, there are conflicting messages coming from the government about how it will approach its budget task. "Everything is on the table," said Hockey, before reiterating that it would stand by its election promises. Which rules out education or health cuts, changes to the GST, and many other things besides.

The budget has deteriorated over the past few years not just because of "out of control Labor spending". It is also due to the massive hit on revenues following income tax and excise cuts over the past decade and the fall in company tax receipts caused by the global financial crisis. Is revenue raising on the table now, or only savings measures?

Hockey has set the scene. If the outlook is as dire as he describes, he needs to be brave. That means more than just cutting services.

Nick Feik
Politicoz Editor

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Joe Hockey warns of spending cuts after $68bn budget deficit blowout

"Australians will have to accept cuts to government spending and services, treasurer Joe Hockey has warned, as he unveiled a mid-year economic and fiscal outlook report showing a “substantial deterioration” in expected economic growth as the major cause of a $68bn blowout in forecast budget deficits over the next four years."

Also: Hard to be impressed by this piece of creative accounting (Ross Gittins, The Age)

Hockey still pulling punches despite budget alarm

"As an exercise in putting out all the rubbish, and creating an ultra-conservative basis from which to rebuild a budget strategy, the mid-year review will serve Joe Hockey well. The Treasurer and Treasury have between them recast the base for forecasts (which in the past few years did much to undermine Labor’s credibility), and set out a grim picture of rising unemployment, a continuing softness in revenue, and exploding spending, which will shape political debate ahead of the May budget."

Also: Yes, Joe Hockey, we understand the problem, but please cut to the chase (Lenore Taylor, Guardian)

Prepare for a cheaper, slimmer NDIS

"Joe Hockey, in his first major economic statement as Treasurer, has deliberately let it all hang out today. Every shameful kilo of excess spending, every lapse in discipline has been piled into this mid-year economic forecast in an effort to compose the most confronting "Before" photo in the nation's economic history."

Also: Joe Hockey defends paid parental leave, Labor warns NDIS under threat after budget blowout (ABC)

Tim Wilson, former policy director of Institute of Public Affairs, appointed Human Rights Commissioner

"The incoming human rights commissioner has defended his appointment to a role that he recently said should be scrapped. The Federal Government says it appointed Tim Wilson, the former policy director of the Institute of Public Affairs (IPA), to restore balance to the Human Rights Commission."

Also: Ladies and gentlemen, your new Freedom Commissioner (Twitter)

And: Sophie Mirabella joins board of submarine maintenance organisation (Guardian)