The Abbott Government has deliberately used assumptions in its mid-year Budget update designed to exaggerate the size of forecast Budget deficits and debt, paving the way for deep cuts in the 2014-15 Budget.
The Secretary of the Department of Finance, David Tune, told Senate estimates this morning that the Mid-Year Fiscal and Economic Outlook released in December had dropped the former Labor Government’s fiscal rules, which limited real spending growth.
Mr Tune confirmed that this change in assumptions increased the MYEFO’s projections of the size of Budget debt over the next ten years to 2023-24.
The MYEFO prepared by the Government deceitfully changes the rules and then ‘claims’ to uncover a $667 billion debt figure in 2023-24.
Shadow Finance Minister Tony Burke said this was a deceit on the Australian public.
“It shows that the Abbott Government is so obsessed with cutting healthcare, education and other services for ordinary Australians that it is willing to distort the Budget numbers to justify its hard-line agenda,” Mr Burke said.
“This is yet another example of a Government addicted to secrecy, saying one thing and then doing the exact opposite.”
Mr Tune said the decision to produce the MYEFO based on assumptions there would be no fiscal rules constraining spending growth had been made by the Government, demonstrating that they have purposefully inflated the debt figure.
This shows that the Abbott Government has engineered the use of a set of politically-biased assumptions to pump up the size of the deficit and debt projections in MYEFO.
The independent Pre-election Economic and Fiscal Outlook shows that on the former Government’s policy settings the medium-term projection shows the underlying cash surplus growing after the forward estimates and reaching 1 per cent of GDP in 2020-21. Net debt was projected to return to zero in 2023-24.