By Andrew Bolt ~
There was no need for the Treasurer to exaggerate – a desperate overreach which lost him the high ground.
The Labor Party is stretched making its revenue and spending commitments add up over the four-year budget period, but the gap is nowhere near the $67 billion claimed by the Coalition.
A realistic estimate of the gap would be closer to $10bn, but much depends on announcements yet to be made and the accounting Labor has promised before the election.
Labor finance spokesman Tony Burke zeroed in on the Coalition’s estimate that Labor’s aspiration to raise foreign aid to 0.5 per cent of GNP would cost $19.3bn over the next four years.
Labor foreign affairs spokeswoman Tanya Plibersek had announced at the weekend Labor would lift foreign aid by just $224 million over the next four years…
The under-pressure Treasurer, when confronted by errors in government calculations of Labor policies, back-tracked and conceded that the claimed Labor funding shortfall was “at least $32 billion and as much as $67 billion. They are well behind”.
And the sick joke is that the Liberals have a spending problem themselves. Leigh Sales put it well to the Treasurer:
LEIGH SALES: You keep talking about Australia’s need to live within its means. You’re forecasting deficits of $85 billion over the next four years. How is that living within our means?
SCOTT MORRISON: Well, within four years we’ll have the deficit down to $6 billion: 0.3 per cent as a share of the economy.
And the projections – and I stress they’re only projections – have the budget back in balance in 2021…
LEIGH SALES: Last week’s pre-election economic and fiscal outlook says that the timetable you’re talking about – the trajectory – for the return to surplus is “very sensitive to underlying assumptions”. I think in non-economic boffin speak, that’s: “Tell him he’s dreaming”?
SCOTT MORRISON: No. What that means is that it’s a sensitive economy that’s out there… I still think we have very modest expectations of growth and consistent with where the rest of the world is.
LEIGH SALES: But to give you an idea of how tenuous those assumptions are and what they’re pointing out in PEFO: the timetable for the return to surplus relies on revenue surging as a proportion of GDP to a ratio we’ve only seen twice in the past 40 years. That’s the sort of luck you’re relying on?
SCOTT MORRISON: Well, no. What we’re relying on is growth returning to three per cent. Now, we actually had a three per cent growth rate last year…
LEIGH SALES: The PEFO document, though, is also making clear that if Australia wants to achieve the 10-year budget projections, what is required – and I quote – is: “Renewed vigour in encouraging and delivering structural reform across all parts of the economy.” Is that code for: “You’re not doing enough”?
SCOTT MORRISON: Well, what it’s code for – I don’t think it’s code at all, Leigh. It’s saying that you can never rest on the job of ensuring that our economy is growing and doing the things that you need to do to ensure the economy is growing.
Morrison was playing with definitions. Adam Creighton explains:
The growth rate of the dollar value of the economy, known as nominal GDP (as opposed to the more commonly used measure of real GDP), crucially affects Treasury’s estimate of how much tax will be collected. In the latest budget, nominal GDP growth is forecast to rise from 2.5 per cent this financial year to 4.25 per cent next and then flatline at 5 per cent. This implies, for instance, company tax, which fell 2.2 per cent this year, surges 19 per cent across the next two years. It implies annual capital gains tax revenues jump an incredible 65 per cent across the four years to $17.5 billion.
Analysis by The Weekend Australian suggests the government is mired in a permanent annual deficit of about $40bn, in today’s dollars, if nominal GDP growth remains at 2.5 per cent. According to the budget papers’ sensitivity analysis, nominal GDP growth of one percentage point less than forecast in 2018 would add $5.4bn to the budget deficit.
Thus, if it remains at 2.5 per cent for the entire budget period — and bear in mind it was 1.4 per cent last year — the budget deficit would not be $6bn as forecast in 2019, but $56bn.
Andrew Bolt writes for the Herald Sun, Daily Telegraph, and The Advertiser and runs Australia’s most-read political blog. On week nights he hosts The Bolt Report on Sky News at 7pm and his Macquarie Radio show at 8pm with Steve Price.