Parliamentary Budget Office sounds warning on ballooning government spending SAMANTHA MAIDEN, WITH AAP NEWS CORP AUSTRALIA NETWORK AUGUST 23, 2014 2:43PM SHARE Tax threat ... Prime Minister Tony Abbott at the South Australian Liberal AGM on SaturdayTax threat ... Prime Minister Tony Abbott at the South Australian Liberal AGM on Saturday. Picture: Dave Cronin Cormann says budget emergency remainsTax threat ... Prime Minister Tony Abbot... FAMILIES face higher taxes and hikes to interest rates if the Senate fails to pass tough budget savings measures, the Prime Minister has warned. Tony Abbott issued the warning as Parliament prepares to resume after the winter break with no breakthrough on the abolition of the mining tax, the introduction of the GP co-payment and university reform. Moving to reset the budget sales strategy, Tony Abbott warned that failure to deliver tough savings measures would leave future governments with no option other than to increase taxes. “If the budget stays weak that means higher taxes, that comes out of your pockets, that means more borrowings and that means higher interest rates,’’ the Prime Minister said. “If we want a stronger economy we have to start off with a stronger budget. A stronger budget is the key,’’ he said. Mr Abbott also moved to manage expectations that many reforms remain stalled, arguing that many savings measures had quietly passed the Senate. “Not all the news from the federal Parliament is difficult and vexed. About 50 per cent of our budget savings have already passed smoothly through the Parliament,’’ he said. “The biggest savings of all, some $7 billion in savings from reducing the rate of growth in our foreign aid budget has already gone through as part of the appropriation bills. Labor hit back at the claims accusing the Abbott Government of a “tied, old, scare campaign’’ on interest rates. “Tony Abbott and Joe Hockey have tried and failed at every attempt to sell their unfair budget and now they are resorting to a pathetic and tired old scare campaign,’’ Labor’s Chris Bowen said. “The old chestnut of higher interest rates should be consigned to history. And apparently Tony Abbott wants to avoid tax rises by putting up tax. His first budget is full tax increases, and his own Treasurer had been shown not to understand their impact. The Prime Minister is looking and sounding shrill and defensive.” Mr Abbott said debate over the fairness of the budget failed to acknowledge that Australia was living beyond its means to pay the interest on Labor’s debt. “They left you, the people of Australia, with $667 billion in projected debt. That’s $25,000 for every Australian man, woman and child. “They talk about fairness. What’s fair with saddling our children and our grandchildren with an intolerable burden of debt ?’’ Finance Minister Mathias Cormann said he did not resile from warnings of a “budget emergency’’ but said there was no rush to fix it. “We are facing a budget emergency as a country, we are facing a very challenging fiscal situation but the government is dealing with it ... through the normal processes of the parliament,” he told Sky News on Saturday. Treasury figures released this week confirmed the majority of the government’s budget measures have been legislated for, including $25 billion in savings. Opposition spokeswoman Michelle Rowland said if there was a budget emergency the government should explain why it had doubled the deficit since the Abbott Government was elected. “Why is it the case that they are intent on pursuing a rolled gold paid parental leave scheme which even their own side considers is unaffordable,” she told Sky News. The comments come as a Parliamentary Budget Office (PBO) report warns that government spending will balloon over the next decade, putting the nation’s fiscal sustainability at risk. According to the report, which based projections on measures outlined in the 2014-15 federal budget including the yet to be legislated GP co-payment, the Paid Parental Leave (PPL) and National Disability Insurance (NDIS) schemes will be the biggest drivers of spending growth over the next decade. The PPL is estimated to cost $7 billion a year by 2024-2025 while NDIS spending is projected to reach $26 billion a year. In comparison, the PBO estimates the Medicare $7 co-payment measure will reduce spending by $2.2 billion a year by 2024-2025. The PBO estimates that the PPL alone will require more than triple the funds the government hopes to raise through its $7 Medicare charge. The PBO report states a sustained period of growth in government spending over the past 10 years has probably lifted community’s expectations of what the government can provide. “It is difficult to see how governments could continue to meet these expectations while containing spending growth to the level currently projected,” the report states. Originally published as PM’s tax threat over budget couriermail.au/news/national/parliamentary-budget-office-sounds-warning-on-ballooning-government-spending/story-fnihslxi-1227034060867
Posted on: Sun, 24 Aug 2014 07:45:01 +0000
Trending Topics
Recently Viewed Topics
© 2015