Tony Abbott says there will be ‘broad balance’ in five years, but acknowledges ‘we’ve got a problem beyond that’

This article is more than 5 years old

This article is more than 5 years old

Treasury officials have confirmed the federal budget is unlikely to return to surplus at any time in the next 40 years on the basis of currently legislated measures.



Officials reaffirmed the long-term projections in the Intergenerational Report after Tony Abbott suggested the document showed “that we get back to broad balance in about five years”.

The prime minister made the observation in a radio interview on Wednesday as he sought to assure voters not to expect a repeat of the government’s poorly received first budget when the treasurer, Joe Hockey, hands down his next economic blueprint in two months.

Calling for people to take a “glass half-full approach”, Abbott described the planned savings measures as “almost dull compared to last year”.

“It will be a much less exhilarating budget for those who are budget devotees and structural reform enthusiasts,” Abbott said at a media conference.

“But nevertheless this will be a budget that is prudent, frugal, responsible, there’ll be something in it for families, a better childcare deal in particular, and there’ll be much in it for small business, particularly the tax cut that small business is yearning for because we want to unleash the creativity of our small business people.”

Treasury officials were questioned at a committee hearing on Wednesday.

Labor senators focused on Abbott’s remark to radio 3AW that “on the measures that have been successfully put through this parliament, the Intergenerational Report shows that we get back to broad balance in about five years [although] we’ve got a problem beyond that”.

Nigel Ray, the executive director of Treasury’s fiscal group, said the budget would be “quite close” to a surplus in five years based on currently legislated measures, and he would call that broad balance.

The relevant graph in the Intergenerational Report shows an improvement in the next five years, but not quite enough to reach surplus. The graph shows the budget then deteriorates towards a deficit of 6% of gross domestic product by 2055.

Ray said the budget was not expected to return to surplus at any time in the next 40 years unless the parliament passed the government’s previously announced budget policies “or some replacement for them”.

He said those forecasts were based on policies that were in last May’s budget and December’s mid-year economic and fiscal outlook (Myefo).

Asked by the Labor senator Sam Dastyari to confirm the budget would remain in deficit on the basis of policies that had already passed the parliament, Ray said: “Currently legislated, we don’t achieve a budget surplus in the 40-year projection period on the basis of Myefo’s base – that’s correct.”

The opposition leader, Bill Shorten, asked Abbott during question time to confirm “that the same cuts and chaos of the last budget will be front and centre of the next budget”.

Abbott suggested Labor should spell out its alternatives. “We were left in a catastrophic position by members opposite,” he said.