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Parliamentary Budget Office reveals problems with structural position of federal budget
By chief political correspondent Emma Griffiths | ABC – 22 minutes ago.. .

Two official reports on the underlying position of the federal budget have been released, both painting a dire picture of the "structural" position of the nation's coffers.

The federal Treasury and the newly established independent Parliamentary Budget Office (PBO) have released fresh estimates of the structural budget balance, a measure Treasury says adjusts for temporary factors and can provide "insight into the sustainability of current fiscal settings".

Both reports show the budget will remain in structural deficit until at least 2018-19.

Economist with Deloitte Access Economics Chris Richardson says the two reports show "big problems" with the budget.

"The usefulness of the figures out of both the Parliamentary Budget Office and the Treasury is it's underscoring the fact that the budget is in more trouble than it looks," he told The World Today.

"We overdid it.

We've overdone it for a decade." In its first major report since it was formed in February last year, the PBO has revealed that the structural budget position declined steadily over the period 2002-03 to 2011-12 as receipts fell but Government payments grew.

It says the fall in receipts was largely due to the "cumulative effect of the successive personal income tax cuts granted between 2003-04 and 2008-09" - by the Howard and Rudd governments.

The PBO also cites the Howard government's decision to freeze the indexation of petrol excise and a fall in the consumption of cigarettes, leading to a drop in tobacco excise receipts, as significant factors in the decline of the structural budget balance.

It goes on to say that the structural budget position "showed a sharp improvement" last financial year and it expects a gradual improvement to the year 2016-17, when it will still remain in a structural deficit of between 0.25 and 1.5 per cent of GDP.

'Message politicians aren't telling us' Mr Richardson has hailed the PBO figures as akin to a "whistleblower" document, saying the release marks a "great day for Australia".

"Treasury is a magnificent institution but quite correctly it works for the government of the day," he said.

"The Parliamentary Budget Office has that greater degree of independence and Australians need to hear the message that the politicians on both sides aren't telling us." Treasurer Wayne Swan says the PBO document shows the structural deficit began in 2001 and accelerated under the final years of the Howard government "when they went on a spending spree and they spent like drunken sailors".

"Since that time we've been putting in place $300 billion worth of structural saves to support our budget, to provide for good fiscal policy and to make room in the budget for fundamental schemes that change our nation, like DisabilityCare and the school improvement program - we're proud of that," he said.

The PBO agrees that the Government's savings over the forward estimates for its Gonski schools plan and DisabilityCare do add to the improved budget picture, but says that over time the schemes will cost more.

"Beyond the forward estimates years," the PBO report says, "these savings will be largely consumed by the costs of the schemes and, therefore, they will no longer be available to alleviate pressure on the [structural budget balance]." Non-partisan analysis of budget cycle Overall, it says "the government's balance sheet is in a strong position", with net debt forecast to peak at 11.4 per cent of GDP in 2014-15, "low by international standards".

It believes this gives the Government plenty of "fiscal space" to move in addressing the structural shortcomings.

The role of the PBO is to provide independent and non-partisan analysis of the budget cycle, fiscal policy and the financial implications of policies.

The updated Treasury estimates of the structural budget balance also show that the budget position deteriorated from the mid-2000s, largely because of the temporary fiscal stimulus measures put in place by the Government to buffer Australians from the global financial crisis.

However, it also points to the "successive large cuts in personal income taxes" as a factor.

It shows the structural budget position returning to surplus in 2018-19.

bogarde73 wrote on May 22^nd, 2013 at 1:50pm:




and leave Tom Waterhouse alone so we can start gambling on two flies crawling up a pipe..

I have often wondered how long before pokermachines in supermarkets.. you know instead of those dumb gumball machines...pop the old change in for a flutter..

they can call it DOING YOUR BIT FOR YOUR COUNTRY..whilst having fun..

Can we expect Phony Tony to do a Howard and ignore all advice while he destroys the economy for the next generation?

philperth2010 wrote on May 22^nd, 2013 at 6:44pm:


Whenever I hear these knuckle-draggers (Abbott/Hockey) talking about (down) the economy, I
simply tune out. They always distort the facts, when they're not flat-out lying. When the whole
world, except Tony & Joe, and their cogitationally-challenged followers, is praising our economy
and is jealous of it, these retards keep claiming its in disarray, waste blah blah, surplus blah blah,
cuts blah blah carbon tax blah blah blah, then I sure know who I'll be listening to.

And it ain't Tony, or Joe, or the aforementioned cogitationally deficient supporters.

Voting for Abbott based on the state of the economy really is the vote of a fool.

The budget position?

When a gentleman and a very lovely lady love each other very much, they often find the budget position to be a very satisfactory addition to their boudoir repertoire.

BHP and Rio both stated that the forward ore price projections of the Treasury and what Wayne Swan was using for his 2013 "come hell or high water" budget were too high.

They have much lower projections.

As usual private industry was right and the public sector was wrong.

Swan's predicted

$1,500,000,000 surplus

is now -

$18,200,000,000 deficit

.

Makka wrote on May 22^nd, 2013 at 7:54pm:



I have no idea, I'm not a leftard.