Scott Morrison has admitted that the federal budget may not return to balance by 2020-21 as planned.
He told ABC radio that the government would release its mid-year budget update on 19 December with an updated projection for the likely date for a return to surplus.
Deloitte Access Economics released its latest Budget Monitor on Monday, warning the federal budget deficit was projected to expand by another $24.3bn over the next four years.
It said Australia’s record low wages growth and a shortfall in company tax were likely to blow a hole in the income tax take, dashing the government’s hopes of returning the budget to surplus in 2020-21, and raising the spectre of credit ratings downgrade.
When asked about Deloitte’s report, Morrison said he had always been “very careful” when talking about the likelihood of returning the budget to surplus.
He said the government’s 2020-21 date was a projection based on the best available numbers in the May budget.
“What I said was that the projection based on the parameters at the time was that the budget would return to balance in 2020-21,” he told ABC host Michael Brissenden.
“Now I’ve always been very careful about that … I know others in the past have made bold predictions and promises about these things.
“The 2020-21 budget balance position was a projection based on those numbers. Now these numbers move, they always have.”
Brissenden asked Morrison: “So if the numbers aren’t there you won’t get to that [surplus] position [by 2020-21]?”
Morrison replied: “Well that’s simple arithmetic. But no one has made that call yet, and no one’s suggesting that yet.”
He also repeated his argument that Australia had an “earnings problem”, with wages growing at a record slow pace, company profits down, much lower terms of trade, and lower commodity prices, so the government had to keep cutting spending.
When he first became treasurer last year, Morrison had said Australia had “a spending problem, not a revenue problem,” but he changed his mind in August this year, admitting the country did have an “earnings problem”.
“Our nominal growth today is lower than our real growth, by a full percentage point,” he told the Bloomberg Economic Summit in Sydney in August.
“This is an uncommon predicament and a core challenge in working to bring the budget back to balance.”
After Labor’s 2012 budget, the then shadow treasurer, Joe Hockey, told the National Press Club that a future Abbott government would generate many surpluses.
“Based on the numbers presented last Tuesday night we will achieve a surplus in our first year in office and we will achieve a surplus for every year of our first term,” Hockey had said.
In early 2015, after a huge fall in commodity prices, and struggling to get large savings measures through the Senate, Hockey told the Coalition party room that the budget may “never get back to surplus.”
Hockey left the Treasurer’s portfolio without delivering a surplus, like Labor treasurer Wayne Swan before him.
