Treasurer rejects suggestions he should consider a wider range of policies to help reduce the budget deficit

This article is more than 4 years old

This article is more than 4 years old

Scott Morrison has invited the new parliament to embark on a round of fiscal consolidation over the next six months as Standard & Poor’s warned it may lower Australia’s AAA credit rating within two years.

But the treasurer made it clear the Coalition would not be adjusting its own spending and taxing agenda, digging in behind his $48b corporate tax cut plan.

He has also rejected suggestions he should consider a wider range of policies to help reduce the budget deficit, roundly dismissing Labor’s negative gearing proposals.



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He says the Coalition’s budget trajectory is the right one and, if the Coalition forms government, it intends to pursue its budget plans.

“The parliament will return once a government is formed, budgets will be taken through the parliament and there will be keen eyes watching in rating agencies to see how the parliament responds to [see if] we can maintain the trajectory that the government has set out – that is the consequence of today,” Morrison said. “I think it is a time for obviously sober reflection on the fact that the world is watching.”

The rating agency warned on Thursday that the prospect for improvement of Australia’s budgetary performance had weakened since the election.

Since the chances of pushing tough reforms through parliament over the next three years were slim, the chance of a credit downgrade had therefore increased, it said.

It said there was a one-in-three chance that it could lower the credit rating for Australia within the next two years.

It will do so if it believes Australia’s parliament is unlikely to legislate savings or revenue measures that will put the budget in a balanced position by the early 2020s.

“We will continue to monitor, over the next six to 12 months, the success or otherwise of the new government’s ability to pass revenue and expenditure measures through both houses of parliament,” it warned.

Morrison jumped on the warning, saying it was crucial that the Coalition’s budget plans were pursued to prevent a future credit downgrade. But he dismissed suggestions that the budget could be improved by broad revenue-raising measures.

“The budget actually had a number of those and particularly in relation to superannuation,” he said.

When asked about revenue-raising measures that would be popular with the community, like reforms to negative gearing and capital gains tax discount, he said: “You’re raising issues of politics with me, not policy.

“You are saying the Labor party wanted to increase taxes and that seemed to be popular. I dispute that for a start and I made comments on the election yesterday so I don’t intend to go over those again here today.”

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The shadow treasurer, Chris Bowen, said he had been warning that Australia’s credit rating was at risk.



“We also pointed out that the government’s budget projections were based on fantasy, that the iron ore price was highly heroic, that the assumptions on wages and nominal growth were highly optimistic and, of course, Standard & Poor’s have made the same observations today in their report,” he said.

He said revenue measures were necessary to protect the AAA credit rating and that’s why Labor went to the election “with a difficult political issue that has been in the too-hard basket for 30 years of dealing with negative gearing and capital gains tax concessions.

“The Labor party led that debate, because we know that that is what is necessary for the long-term budget health of the nation.

“It is time now for the government to reflect on their absolute failure to deal with those issues.”