Australia: A Land Of Deficits As Far As The Eye Can See

Treasurer Joe Hockey (Photo: Getty Images)

Treasurer Joe Hockey delivered his budget back in May with expectations of a return to the black by 2017-18.

But according to veteran budget watcher Chris Richardson from Deloitte Access Economics, Hockey and the Government are now faced with deficits “as far as the eye can see”.

This means that in just two weeks when he releases his Mid-Year Economic And Fiscal Outlook (MYEFO), Hockey is faced with the political reality that one of the core planks of the coalition’s election promises – to get the budget back in black – is unlikely to be achieved. It’s been weighed down by a crash in iron ore prices, slower growth more generally and promises made against expectations of enduring economic strength.

Fairfax reports this morning that Richardson is expecting a $5 billion deterioration in this year’s budget position to a deficit of $34.7 billion. But the key political hurdle is that Richardson expects a budget deficit of $12.4 billion in 2017-18 when the Government promised it would be in the black.

Richardson said the budget outlook was still deteriorating due to China slowing and problems in the Senate. He added that no boom in history had ever been permanent and that the deterioration in the terms of trade and economic outlook since 2011, “are taking the grandiose hopes and plans of Australia’s politicians along with them”.

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