Close to five months after Budget night, the Government is finally going to bow to pressure from the Senate and scrap many of the $30 billion of blocked budget measures.
The AFR reports this morning that the Treasurer is now going to turn the focus on a recasting of the budget in light of the changed economic outlook, operations of the ADF in the Middle East and the big drop in iron ore prices.
Notable opposition to the reforms to higher education charges and an overhaul of youth unemployment benefits, which has been reaffirmed this week by the Senate, has left the Government with support for only around $3 billion of the blocked measures, according to the AFR.
New savings will need to be made if Hockey is to keep his promises of stronger fiscal management and an improved budget position. December is the target date for the new measures to be announced.
At stake, of course, is the Treasurer’s credibility with his colleagues and the public, especially given the rhetoric around budget emergency and the need to shrink the deficit. At risk is his claim that the deficit would shrink this year from $48.5 billion to $30 billion.
Also at stake is the Government’s claim to being the better economic manager.
The voting public, credit ratings agencies and investors at home and around the world will be watching what Treasurer Hockey does closely.
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