FEDERAL Treasurer Joe Hockey yesterday released the Coalition’s first budget outlook for the 2013-14 financial year, forecasting a $47 billion national deficit and pointing the finger squarely at the former Labor Government’s fiscal legacy.

The Mid-Year Economic and Fiscal Outlook for 2013-14 showed the national economic position has deteriorated by $68bn against the August budget announcement, with $123 billion worth of cumulative deficits expected over the forward estimates.

“In the absence of any policy changes from what we have inherited, the Budget would not return to surplus within the 10-year medium-term projects,” Mr Hockey said.

“During this time, gross debt on issue is projected to increase to $667bn.”

Mr Hockey pointed to a softening economy as a key factor in the budget position, noting real GDP growth in 2014-15 has been downgraded from 3% to 2.5%. Additionally, Mr

Hockey’s statement identified Labor’s fiscal legacy as a key force behind the economic outlook.

“The government continues to deal with a number of legacy issues inherited from the former government, including:

  • The Reserve Bank of Australia, whose Reserve Bank Reserve Fund was depleted to 3.8 per cent of assets at risk under Labor, required an $8.8 billion grant to allow it to deal with potential economic challenges.
  • A backlog of 92 unlegislated tax and superannuation measures at a cost of $2.9 billion.
  • A $1.2 billion shortfall in funding for offshore processing of asylum seekers.
  • Restoring $1.2 billion in funding for schools in Western Australia, Northern Territory and Queensland that was ripped out of the estimates by then Education Minister Bill Shorten in the 2013 Economic Statement.”

Shadow Treasurer Chris Bowen said the Coalition’s policy plans would create additional debt without improving employment or living standards in Australia.

“The MYEFO shows government spending contributing to the Budget blow-out at the same time as government revenues continue to deteriorate,” Mr Bowen said.

“Despite this, the Coalition continues to plough ahead with irresponsible spending commitments like its expensive Paid Parental Leave scheme.”

AMMA contributed to the commentary by stating that with the right focus on legislative reform and removing of unnecessary red tape that is stifling new project investment, Australia’s resource industry could play a very significant role in assisting our fiscal position to get back in the black.