Hockey puts surplus hopes on ice
Joe Hockey has significantly wound back his expectations of getting the Budget back in the black as falling commodity prices deny the Government vital tax dollars.
The Treasurer used a special briefing to the National and Liberal parties to effectively dump the Federal Government’s Budget surplus rhetoric.
Highlighting the collapse in iron ore prices, Mr Hockey said he hoped to have the Budget back in surplus “as soon as possible”.
His parliamentary slide show also revealed the depth of revenue troubles now facing the Government.
This year’s expected deficit of $40.4 billion was forecast when iron ore was expected to average $60 a tonne.
Today, the post-transport cost had fallen to $50.20 a tonne.
The drop in prices, if continued, would take between $2.1 billion and $2.5 billion out of this year’s Budget alone.
It would also put at risk future deficits, with the Government at this stage expecting a Budget shortfall of $11.5 billion in 2017-18.
Then there are the policy reversals, including last week’s defeated higher education reforms, which will also add to this year’s deficit.
Mr Hockey, who promised last year’s Budget would deliver a sustainable future to Australia, took a more conciliatory tone to the upcoming fiscal blueprint.
“The focus of the 2015 Budget will be to build a stronger Australian economy. The Budget will be responsible, it will be measured and it will be fair,” he said.
Analysts are already tipping next year’s deficit, forecast in December to be $31.2 billion, will be closer to $40 billion.
Mr Hockey also confirmed the coming Budget would have at its centre a small-business package, childcare reform and infrastructure investment.
Helping to pay for any extra spending will be a clampdown on tax dodgers and welfare handouts.
Shadow assistant treasurer Andrew Leigh said Peter Costello had faced the Asian financial crisis while Wayne Swan had confronted the global financial crisis.
“Joe Hockey says he can’t deal with the fall in the iron ore price. I don’t think that is good enough,” he said.
An Essential Poll, released yesterday, found just 27 per cent of almost 1800 respondents approved of Mr Hockey’s job as Treasurer.
