This was a piercing question from the floor to prime minister Malcolm Turnbull on this week’s Q&A:
Both of the major parties have pledged to return to surplus in 2020-21, and say that their spending promises can be funded. Given that Treasury forecasts over the past years have fallen short by billions of dollars, it would seem that future projections are unreliable. With this historical reality, it appears that a commitment to surplus and generous promises are being made on the never-never. Without going far enough with necessary spending cuts, are both sides guilty of ignoring economic facts?
Turnbull’s answer pointed out that while in recent years forecasts were too optimistic, they had been too low during the Howard years. This evidenced by this chart from Treasury:
What was arguably omitted was how the transfer of the impact of China’s growth slowdown into Australia’s domestic economy happened at a speed that surprised everyone over recent years. This is a reality of Australia’s place in the modern global economy; the effects of even small external shocks are felt immediately because businesses are now, more than ever before, intertwined into the global economic framework and therefore at the mercy of shifts in global demand.
The answer also led to a testy but amusing exchange between Turnbull and host Tony Jones, whom the PM accused of doing the work of the Labor party with his interjections. Here’s the full segment.
— ABC Q&A (@QandA) June 20, 2016
Twitter Moments has a great round-up of each of the questions which you can see here.