The tax breaks for small businesses in the federal budget should be a significant shot in the arm for the domestic economy.
But for a government elected on a promise of ending a “debt and deficit disaster”, and whose first 18 months in office were defined by a monster hit to its popularity because it embarked on a slash-and-burn campaign on public spending, the 2015 budget exposes a dramatic change in direction.
Defending last year’s spending cuts as in Australia’s best interests, Tony Abbott repeatedly said his job was “not necessarily to win a popularity contest”, but to do what was right by the country.
Weeks after last year’s budget he said: “We were elected not to take easy decisions but to take hard and necessary decisions, and that’s what we’ve done.”
Australians have had it drummed into them that the nation’s debt levels are unsustainable. Treasurer Joe Hockey famously claimed the nation was borrowing $100 million a day just to pay its bills.
This chart from the budget papers and highlighted by the Westpac economics team last night shows how the Coalition’s second budget affects Australia’s debt profile. It clearly shows that the total amount of debt on issue will climb, very gradually, over the coming decade – whereas under last year’s budget and the mid-year review, it was set to decline.
Now sure, there are plenty of things people would rather talk about than gross debt on issue and 10-year Australian government bonds. But this serves to illustrate the epic u-turn in policy and budget philosophy that the Coalition is trying to sell.
The nation’s gross debt will rise to $573 billion in the next decade. If the debt is so unsustainable, why is it rising?
Joe Hockey’s second budget is designed to be popular. The big question is whether it is credible.
More Budget Coverage:
- AT A GLANCE: All the big items in last night’s 2015 federal budget
- Here are the key budget numbers you’re looking for
- ANALYST: The budget ‘hung the economy out to dry’ and more rate cuts are needed
- 31 things you need to know about the federal budget
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- MYOB’s CEO says the $20K startup gift will be ‘phenomenal’ for Aussies
- All the government programs that have been cut in Australia’s federal budget