Joint Media Release with the Shadow Treasurer, Chris Bowen.
The true state of the books released by Treasury and Finance today:
- Confirms that after three years of Liberal Government spending is up, deficits are up, debt is up, wages are down and living standards are down.
- Lampoons the Government’s claims on “jobs and growth”.
- Raises real concerns about the retention of Australia’s triple A credit rating while flagging that Australia has a revenue problem.
Unlike the Government’s Budget, the Pre-Election Economic and Fiscal Outlook gives an independent assessment of the economy. It confirms Malcolm Turnbull’s economic plan is an economic failure and exposes the Government’s so called plan for “jobs and growth”.
Despite the Government’s so-called economic plan, this is a document which sees things getting worse under this government, not better, and one which sees less jobs and less growth.
After three years of failure on the economic transition, the PEFO points out GDP could be ½ per cent lower if non-mining investment continues to fail to pick up.
Treasury and Finance bell the cat with their concern about maintaining the triple-A credit ratings, while making it clear revenue must rise to guarantee stronger surpluses over the medium-term and beyond.
“…tax receipts would still need to rise to around 24.2 per cent of GDP by 2026-27, well above the average of the past 30 years, to achieve a surplus of one per cent of GDP.”
PEFO also spells out what the Government didn’t – that recent wages growth has been the lowest on record.
Over the last three years of Liberal Government:
- The deficit has tripled since the Government’s first Budget.
- Net debt is more than $100 billion more than where it was at last PEFO.
- Spending has risen and remains close to GFC levels.
- Taxes as a proportion of the economy are expected to rise to a level not seen in any year under the former Labor government.
We see the Government talking incessantly about jobs and growth, but when you look at the Government’s record and the facts, we’re seeing the exact opposite.
Under Malcolm Turnbull’s plan for jobs and growth, we’ve seen:
- The economy shed 50,000 full time jobs since the beginning of the year.
- Record underemployment and people getting less hours at work.
- Wages growth falling, hitting a new record low under Malcolm Turnbull – even worse than under Tony Abbott.
- Our prized triple-A credit rating put at risk.
PEFO also exposes the Government on key Budget measures:
- There is nothing in PEFO on the Government’s new position on pathology.
- Scott Morrison and Barnaby Joyce have clearly lied on the Backpacker Tax – the Treasurer has signed the statement at the front of PEFO saying that all Government decisions have been disclosed – and yet we see nothing here of a six-month delay or any sort of measure reversal.
- Finally, in a huge embarrassment for Scott Morrison who has talked up bracket creep as the great moral challenge for the last six months, the Tax Commissioner makes it clear that the personal income tax cuts may not be delivered on 1 July 2016.
ATTACHMENT – KEY QUOTES FROM PEFO
NON-MINING INVESTMENT GROWTH
“The pick-up in non-mining investment has been slower to materialise than previously forecast and any further delays — or a more gradual pick-up — in non-mining investment continues to be a significant risk to forecast real GDP growth” [page 14]
“Analysis presented in the 2016-17 Budget shows that if non-mining business investment were to be flat in 2016-17 and 2017-18, the level of real GDP would be ½ per cent lower than the 2016-17 Budget forecasts after two years” [page 14]
THREAT TO TRIPLE-A AND RETURN TO SURPLUS
“It is crucial for Australia to maintain its top credit rating to ensure the Commonwealth’s borrowing costs, and those across the economy more generally, are kept as low as possible” [page 8]
“Even if payments were reduced from the levels projected at the 2016-17 Budget to the long-term average of 24.9 per cent of GDP by the end of the medium term, tax receipts would still need to rise to around 24.2 per cent of GDP by 2026-27, well above the average of the past 30 years, to achieve a surplus of one per cent of GDP” [page 8]
“The modest projected surpluses beyond 2020-21 are subject to considerable uncertainty” [page 21]
HISTORICAL HIGHS IN DEBT
“Commonwealth Government debt levels are projected to reach recent historical highs, both on a gross and net basis” [page 8]
WAGES GROWTH RISK ON THE DOWNSIDE
“Wage growth has also been subdued, with the most recent result indicating wage growth of 2.1 per cent through the year to the March quarter of 2016, the lowest it has been since the series began in 1997” [page 14]
“The risks to inflation and wages remain on the downside and, if inflation and wages remain persistently weak, they would detract from nominal GDP growth with negative consequences for tax receipts, somewhat offset by a reduction in payments” [page 14]
“The recent averages for some commodity prices are slightly higher than at Budget. By contrast, the latest spot prices are lower. Given short term volatility in prices, these differences are considered not material and so the [Pre-Election Economic and Fiscal Outlook 2016017] technical assumptions have not been changed from Budget” [page 14]