Economy

Budget 2015: Abbott says expect a “dull and routine” budget as government debt accounts for 60% of GDP

Eloise Keating /

The federal government is promising a boring budget

Australian voters should expect a “less exhilarating” budget in May, according to Prime Minister Tony Abbott, who said yesterday he has a “glass half-full” approach to fixing the structural problems with the country’s balance sheet and is not alarmed at Australia’s high level of debt.

In a radio interview with 3AW’s Neil Mitchell, Abbott said because his government “did so much heavy lifting last year, there’s a lot, lot less required this year”.

Instead, Abbott said May’s budget will be “prudent, “frugal” and “responsible”.

“I think when it comes to savings, people will find it pretty dull and pretty routine,” he said.

Abbott’s comments come off the back of the 2015 Intergenerational Report, which projects the budget won’t approach surplus again until 2019-20, at which time the deficit is expected to blow out again.

The projection factors in the savings from last year’s budget that the government has been able to pass through the Senate. However, a number of budget measures remain stalled in the upper house, while others, including the GP co-payment, have been dropped.

But in a joint press conference with Assistant Treasurer Josh Frydenberg, also on Tuesday, Abbott told reporters “there’s no cause for alarm under this government because we have got the budget situation from out of control to manageable”.

“Debt as percentage of GDP, which would have been 120% under the policies of the former government is about 60% under the policies of this government,” Abbott said.

“Now that’s too high. We want to get it in a much, much better situation than that. We’d like over time to achieve this green line, but a ratio of debt to GDP at about 50 or 60% is a pretty good result looking around the world, 120% is a dire result and that’s what we were going to have under the policies of the former government.”

While Abbott would not be drawn on specific measures to be included in his government’s second budget, he did confirm a tax cut for small business is still on the table, as is “significant changes” to childcare.

“There will be significant changes for small business, including a small business tax cut, which will be factored into this budget,” said the Prime Minister.

“So this is a budget that will involve structural change, but they will be much less drastic, they’ll be much less drastic structural changes than the ones that were in last year’s budget.”

Peter Strong, executive director of the Council of Small Business of Australia, this morning welcomed the government’s commitment to including measures in this year’s budget to help SMEs, telling SmartCompany COSBOA is being consulted about what measures will most help the country’s small businesses.

“They are demanding we get back to them and we welcome that demand,” Strong says.

Strong says “slash and burn” policies are not the way to improve the budget bottom line and what’s needed instead is long-term planning.

“Growth is going to come from small businesses,” he says.

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Eloise Keating

Eloise Keating is the editor of SmartCompany. Previously, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry.

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