Hockey to explain Budget path
Deep dismay among Liberals at the Abbott Government's confused economic message will force Treasurer Joe Hockey to give a special address to the party room.
Mr Hockey is likely to face a meeting of coalition MPs tomorrow where he will make a statement on the nation's finances and make clear whether the Government will push ahead with its stalled program of cost cutting.
After years of warning that Australia was facing a "Budget emergency", Tony Abbott abruptly changed his rhetoric last week to say the situation was now "manageable" and predicted the coming May Budget would be "pretty dull" and "routine".
This change in language came despite a predicted worsening Budget bottom line, with falling commodity prices and the failure to get key policies through the Senate set to blow out this year's deficit beyond $40 billion.
Adding to the confusion, the Prime Minister was reported to have told a partyroom meeting last week the Budget would be back to "balance" in five years, leading to speculation the Government was preparing to push ahead with unpopular savings measures or find tough new ones.
Mr Abbott further inflamed the situation by warning repeatedly through the week that Australia was headed for "southern European levels of debt" under Labor.
Worried backbenchers say with the Budget just seven weeks away the Government has no clear economic narrative.
There is also a perception among senior MPs that Mr Abbott and Mr Hockey are at odds on core Budget strategy.
Coalition members feel Mr Hockey wants to continue to pursue difficult reforms but Mr Abbott is demanding a document that does not cause further irritation among voters.
When the 2014-15 Budget was announced, Mr Hockey predicted a deficit less than $30 billion.
But future deficits are now expected to grow.
The Intergenerational Report shows the Budget will not move back into the black over the coming 40 years. A sluggish economy and lower commodity prices are hitting both the Budget and the jobless level.
The economy is not expected to grow fast enough to substantially cut into unemployment for the foreseeable future.
The Reserve Bank is tipping a further increase in the jobless rate, while analysts believe the bank will cut official interest rates to a record low of just 2 per cent by May.
The latest Commonwealth Bank's business sales indicator, to be released today, will confirm the general slowdown across the economy.
