May 3, 2016 – Australian Treasurer Scott Morrison said his first federal budget to be delivered later today will plot a clear path to a return to a surplus, dismissing concerns by global ratings agencies over the country’s finances.
Australia’s annual spending plan is under more scrutiny than usual this year as it doubles as an unofficial election campaign launch ahead of an early poll on July 2 after political wrangling that resulted in the dissolution of parliament.
The ruling Liberal Party-led coalition government is running neck and neck with the Labor Party, latest opinion polls show, putting Prime Minister Malcolm Turnbull in a tough position as he seeks his first mandate since wresting the top job from the hugely unpopular Tony Abbott in a leadership coup last year.
Turnbull and his treasurer have pitched the budget as creating jobs and growth, while also cautioning that the country has to “live within its means.”
“What you’ll see in the Budget is consistent with what we said in the mid year update, a very clear path towards budget balance,” Morrison told reporters as he arrived at Parliament House to deliver his rookie budget.
“Our plan delivers on our commitment to ensure that our spending is a share of the economy falls over the Budget and forward estimates,” he said.
Moody’s ratings agency warned last month that modest spending cuts alone were unlikely to return Australia’s budget to surplus by its stated goal June 2021.
Morrison is expected to report the red ink matched forecasts at around A$37 billion ($28.2 billion) this financial year, a result he will argue allows him to offer the aspirational goal of small fiscal surpluses from 2021-22 onwards.
The government is keen to drive home the message that it alone can be trusted to manage an economy hampered by the end of a once-in-a-century mining boom and balance public finances after years of deficits.
Also expected by analysts are tax cuts for high-income earners and businesses, and a revenue-raising UK-style Google tax.
The government has already flagged a A$5 billion ($3.8 billion) fund for major public transport projects, partly funded by the privatisation of state assets. On Wednesday it confirmed the budget will include a 12.5 percent increase to cigarette excise over 4 years.
“You don’t get to a budget balance and be able to sustain it by just ramping up taxes and ramping up spending,” Morrison said. “That is not a sustainable plan for Australia, not a plan for jobs and growth.”