'We Made A Mistake,' Says Joe Hockey As He Prepares To Announce A Bigger Budget Deficit And More Spending Cuts

Photo: Getty / James Alcock

Treasurer Joe Hockey will announce spending cuts after confirming the budget is deeper in deficit and will take longer to bring under control than forecast.

The numbers to be official released on Monday will fuel the debate over mistakes the government made in spruiking the budget, communicating major change such as higher fees for tertiary eduction and the now dropped $7 medical visit co-payment.

“We made a mistake,” Hockey told Sky News. “I fully accept that we could have done more marketing. We could have spent more time explaining what was happening to the Australian people and we should have.”

Among the cuts expected are the scrapping of 175 government agencies, according to a News Corp report. This would save $500 million.

The budget forecasts have fallen hard after a raft of new revenue measures and restructuring, such as fees for tertiary education, have been blocked in the Senate.

And falling prices for commodities, including iron ore, the big Australian export to China, means fewer tax dollars flowing to the federal purse.

The extent of the budget damage, the gap in revenues, and the spending cuts will be known when Hockey releases the MYEFO (Mid-Year Economic and Fiscal Outlook), essentially a budget update, on Monday.

“They’re modest savings overall because our expenditure is very modest,” Mr Hockey said.

“New spending – we’re offsetting with new savings. And the savings we’re announcing are not going to have a negative impact on the Australian economy.”

The budget deficit for this financial year is expected to be worse by as much as $5 billion than the forecast of $30 billion made when the budget was released in May.

During the Sky News interview, Hokey also appeared to discount increasing the GST (Goods and Services Tax) as a way of getting a balanced budget.

“I don’t see broadening the GST or increasing the rate of the GST as a silver bullet for the economy at all,” Hockey said.

“I don’t have any desire to increase the cost of living for everyday Australians without being able to properly compensate for it and the budget has limited capacity to do that.”

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