Budget review reveals astonishing national debt

THE Treasurer says the economy is on track, but a breakdown of the budget forecast reveals a projected national debt equivalent to $30,000 per person.

Mid-Year Federal Budget review

SCOTT Morrison has some explaining to do.

The newly minted treasurer’s first major budget statement has been met with concern from commentators and economists with the yesterday’s gloomy midyear budget review revealing a multi-billion dollar budget blowout.

Buried in Mr Morrison’s cautiously-worded statement was news Australians would inherit a national debt reaching $667 billion in the next 10 years — up from $573 billion at previous budget estimates.

Split across the population, the government’s debt works out to an amount per person that would see some change from a family car — around $30,000.

The budget review predicted bigger deficits over the next four years, more government debt and weaker economic growth than forecast in May.

The treasurer announced a blowout of $2.3 billion in this year’s deficit to $37.5 billion, but said the economy was heading in the right direction.

“We continue patiently and responsibly on the path to budget balance,” Mr Morrison told reporters in Perth.

But economists are already questioning whether his promise of a surplus, which as already been pushed back a year since the budget landed in May, is achievable.

Oxford Economics’ latest economic forecasts released on Wednesday cut its 2016 world growth estimate to 2.6 per cent from 2.7 per cent previously.

“The world will remain stuck in the sub-par growth phase that began in 2011,” Oxford Economics lead economist Adam Slater says. That’s not good news for a commodity producer like Australia.

Treasury’s world growth forecast is also viewed as optimistic at three per cent for this year, 3.5 per cent for the next when, for example, the United Nations last week cut its forecast to 2.4 per cent for 2015, and 2.9 for 2016.

Mr Morrison, however, claimed the government was finally getting on top of its spending problem, promising a pushed-back return to surplus by 2020/21.

He likened Australia’s path back to a balanced budget to a summer family road trip.

“There are no shortcuts,” he said.

“There may be some delays on the way with road works ... plenty of people in the back seat, which often happens when I’m driving the family saying ‘Are we there yet? Are we there yet?’. That’s natural. The path back to budget balance is similar to that.”

The opposition has slammed the budget as an ‘attack on the sick and poor’. Shadow Treasurer Chris Bowen. Picture: AAP/Mick Tsikas

Announcing changes to bulk-billing in pathology services, the government is being accused of attacking the health system to balance the budget.

The government plans to remove bulk-billing incentives for pathology services, reduce the bulk-billing incentive for magnetic resonance imaging services and align bulk-billing incentives for diagnostic imaging with GP services.

It will save more than half-a-billion dollars from changes to aged care funding and almost $600 million by streamlining funding for health workforce programs.

It’s also scrapping a program aimed at improving access to radiation oncology, saving $26 million.

Labor and the Australian Medical Association slammed the budget update as an attack on the sick and the poor.

“This is a government who will have a wind farm commissioner, but chase down payments going to people requiring Medicare support for diagnostic images and pathology for the treatment of cancer,” Opposition Leader Bill Shorten told reporters in Sydney.

Opposition health spokeswoman Catherine King said the measures were worse than anything former prime minister Tony Abbott came up with.

“Malcolm Turnbull has proven that no matter who the leader is, the Liberals only ever see health as a source of budget cuts and will always look to make health less affordable for those who need it most.”

Shadow assistant treasurer Andrew Leigh told ABC Radio the government was spectacularly failing its own “hallmark economic management test” that it set when in opposition.

Asked if Labor could do a better job at returning the budget to surplus, Dr Leigh said: “You couldn’t do worse”.

The opposition is also concerned about $141 million slated for trimming from mental health.

Labor frontbencher Katy Gallagher said the decision was “shortsighted” and would put greater pressure on an already stretched system.

Shadow Treasurer Chris Bowen said Labor was “deeply concerned” about several other announcements, including the removal of bulk-billing incentives for pathology services.

“Some of these measures are particularly harsh,” he told ABC Radio.

“We’re back in 2014 budget territory under Malcolm Turnbull and Scott Morrison.” Mr Bowen said a crackdown on welfare cheats by using better data matching also showed Mr Morrison was a “one-trick pony”, having previously announced the policy.

Originally published as Budget review reveals astonishing national debt