Josh Frydenberg has copped a grilling after announcing that the forecast budget surplus would be slashed to $5 billion.
Appearing on ABC’s 7.30 on Monday evening, the Treasurer was accused of “recklessness” for maintaining that a surplus will be delivered next year.
In her opening question, host Leigh Sales said: “There are downgrade forecasts everywhere you look. Every sign points to a struggling economy. How is it not reckless to cling to your surplus-at-all-costs mentality?”
Mr Frydenberg replied: “Just to correct the record there for you, Leigh, these numbers show that the participation rate is better than what was forecast at budget, the public final demand, which is government spending on infrastructure as well as programs like the NDIS is also up from budget …’
Sales cut in, saying: “I don’t think you are correcting anything there. I’m pointing to the major economic indicators — growth, inflation, wages, household consumption.”
Mr Frydenberg reiterated that the nation is “living within our means”, and that the Morrison government will “deliver the first surplus in 12 years” and that the “Australian economy will continue to grow”.
Sales asked: “What do you think Australian voters care more about — a tiny budget surplus next year, or staying out of recession?”
When the Treasurer tried to say the government wants to “pay back” the debt it inherited under Labor, Sales fired back: “It’s not debt you have inherited. Debt has doubled since the Coalition took office.”
“You are trying to paint a rosy picture, but why are we seeing GDP growth downgraded, household consumption growth downgraded and business investment growth downgraded?” she asked.
“On household consumption, some people are saving as opposed to spending. It is my job to put more money in their pocket.
“We saw that household disposable income had its fastest increase in a decade. That’s not insignificant. When it comes to business investment, that’s going up. As I said, mining investment will have its first jump in seven years.
“What we’re determined to do is to grow the economy. What these numbers show is that next year the Australian economy will grow faster than the United States, the UK, Germany, France, Japan and other comparable nations.”
Sales replied: “Are you suggesting that all the economists today interviewed and economic analysts who have looked at this and have got it wrong — it is actually a wonderful rosy picture, nothing to be worried about?”
Mr Frydenberg said the government had “worked really hard” to bring spending under control.
“But I also don’t understate some of the significant global and domestic head winds, Leigh, that we’re facing. The drought has taken a quarter of a percentage point off GDP.
“Of course, it’s required additional support into those communities. The trade tensions which may be showing some signs of abating have also affected negatively consumer sentiment and business sentiment so we can’t ignore those facts.”
Mr Frydenberg today released the mid-year update to the 2019/20 budget — handed down in April — which showed a reduction in the budget surplus to $5 billion.
The forecast for economic growth has also been slashed from 2.75 per cent, to 2.25 per cent, the Mid-Year Economic and Fiscal Outlook (MYEFO) showed.
Shadow Treasurer Jim Chalmers said the move revealed two humiliating confessions: that the economy is weaker, and that the government had no idea and no plan to turn things around.
“Everything has been downgraded in this MYEFO, but especially the government’s economic credibility,” Mr Chalmers said.
Mr Chalmers said both economic growth and wages growth had been downgraded, the unemployment rate had been revised up, employment growth forecasts were relatively unchanged but the business investment number had taken a massive hit this year.
“Remember Scott Morrison and Josh Frydenberg made a central part of their election pitch that they would make the economy even stronger, but instead, as these numbers show, the economy has gotten substantially weaker on their watch,” he said.
Shadow Finance Minister Katy Gallagher said Mr Frydenberg had tried to blame Labor for the problems but noted that net debt was up to $392 billion on the government’s watch.
“This is the seventh year, this is their budget, their MYEFOs, their updates they put out,” she said.
She said gross debt had more than doubled and was now at $556 billion.
“In this update, they have chucked away their promise on eliminating net debt in 2029/30.”
When asked what they would like to see in the next Budget in May to address the issues, Mr Chalmers said the economy needed a boost.
He said suggested a tax break for businesses that invested onshore, a responsible increase to Newstart, a change to the timing of tax cuts and more infrastructure to be brought forward.
Ms Gallagher agreed and said the government should also be taking leadership on issues such as fixing aged care and taking climate change seriously.
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