Coalition Budget forecasts wrong by $100 billion, new private sector data shows

BUDGET forecasts since the Coalition came to power are wrong by $100bn and rising, according to new data, suggesting the Budget is, in a word, shot.

Prime Minister Malcolm Turnbull is under pressure for this year’s May Budget. Picture: Jack Tran

EXCLUSIVE

BUDGET forecasts since the Coalition came to power are wrong by $100 billion and rising.

New private sector forecasts published today by Deloitte Access suggest the miscalculation has swollen to $105 billion.

Coming on the back of Labor Treasurer Wayne Swan’s repeated false promises of a return to surplus, confidence in the Budget is, in a word, shot.

The biggest error has been that assumptions about commodity prices and economic activity have been way too optimistic.

“There is, quite rightly, a natural scepticism of the Budget when the claimed budget position by both Labor and Coalition governments has been so consistently wrong, and so consistently wrong on the downside,” said PwC economist and budget expert Jeremy Thorpe.

Deloitte Access economist Chris Richardson said since the global financial crisis, budgets overseen by both political parties had assumed that rapid returns to normal levels of economic activity would cover increased spending and pay off debt.

Prime Minister Malcolm Turnbull’s government will be under pressure to deliver in this year’s Federal Budget. Picture: Jack Tran

But time and again the predictions had proven wrong.

“Albert Einstein famously noted that insanity is doing the same thing over and over and expecting different results,” Dr Richardson said.

“After moving the date for the ‘return to surplus’ another year time and time again, and doing so without changing any of the underlying assumptions, are we not all a little insane?”

The budget bottom line has been further compromised by savings plans failing to pass parliament.

Deloitte Access estimates Senate delays will increase spending by $810 million in 2017-18.

And if the Government can’t get the nod for measures first proposed as far back as 2014, there will be further hits of $3 billion 2018-19 and again in 2019-20.

Deloitte Access Economic's Chris Richardson has his assessment of the Coalition’s budgets. Picture: AAP

Mr Thorpe said: “The Government’s continuing reliance on such unlegislated measures … reinforces the message that the budget headline is being massaged for a positive headline rather than painting a true sense of the national government’s fiscal position.”

The cost of bottom-line blowout will have to be met by the next generation, Dr Richardson said.

“Young Australians haven’t realised is that the most prosperous generation that Australia has ever seen is running up the credit card and stiffing them with the bill,” he said.

Asked to explain the $100 billion deterioration, a Treasury spokesman said it was mainly due to “the impact of changes in the economic outlook” which had cut revenue by $135 billion.

“The Government’s decisions have improved the underlying cash balance,” the spokesman said.

Originally published as Coalition Budget forecasts wrong by $100 billion, new private sector data shows