The Coalition’s frenzied attack on Labor’s budget black hole and costing of election promises is not only lame, it is somewhat juvenile.
Numbers are being made up for Labor policies that do not exist as they attack “billion dollar Bill Shorten”.
In their claims of a budget black hole, the Coalition are in no way reflective of their own track record on the budget which has ramped up government spending, debt and deficit over the past three years.
The Coalition’s own budget black hole is continuously glossed over even though it is there for all to see in its budget which was released by Treasurer Scott Morrison earlier this month.
Let’s have a look at the Coalition’s fiscal failings.
To start to do that, we need to go back to the 2014 budget which was handed down by Joe Hockey in May of that year.
In that budget, the cumulative budget deficits for the period from 2014-15 to 2018-19 was $55 billion.
Fast forward two years to the budget delivered by Scott Morrison and the deficit figure for those years has almost tripled, having blown out by $101 billion to $156 billion.
This is the result of a remarkable unfunded spending surge from the Abbott and Turnbull governments and weakness in government revenue from a mix of unwise tax cuts and sub-optimal economic conditions.
The Coalition’s black hole over these two years means $101 billion of larger budget deficits.
Of course, the deficit blowout under the Coalition has implications for government debt which seems to be the unspoken issue of the election campaign.
Net government debt is forecast to escalate to a peace-time high 19.2 per cent of GDP – close the double the level inherited from Labor in 2013.
The government is now borrowing $14 billion a year to pay interest on government debt.
All of which begs what should be the real question of the budget and deficit election debate and that is both sides need to be framing their policy agendas with an eagle eye on the bottom line.
They need to make sure that the path to a budget surplus is not undermined by unaffordable spending or tax cut promises.
Which ever side wins the election on 2 July, the budget update that will greet them when they sit down with Treasury and Finance will reveal a larger deficit than the one outlined earlier this month.
The crashing iron ore price alone has added close to $10 billion to the budget deficit forecasts over four years while the lower than expected wages and inflation data suggest other revenue could fall short by a similar amount.
So rather than the cheap argument that “your black hole is bigger than mine”, serious policy proposals would look to reform the tax system, health care and education, but at the same time, ensure the budget is framed so that the return to budget surplus is something tangible.
Stephen Koukoulas is a Yahoo7 Finance expert with
more than 25 years experience as an economist in government, as Global Head of economic and market research, as Chief Economist for two major banks, and as economic advisor to the Prime Minister of Australia.