Leigh Sales asks Treasurer Scott Morrison if he’s being ‘a little bit optimistic’ in his Budget

IT DOESN’T take long for the shine to come off a Budget when your first stop after delivering it is a grilling from 7.30 host Leigh Sales.

TREASURER Scott Morrison has endured a scathing critique of his first Federal Budget by Leigh Sales, who has described the Turnbull Government’s economic record as containing “deficits as far as the eye can see”.

“How is it that three years ago the Coalition was outraged by Labor’s inability to achieve a surplus?” Sales asked Mr Morrison in his post-Budget interview on the ABC’s 7.30.

“You’ve been in power for three years. You say you’re reducing [the budget deficit], but when you’re looking at the percentage of spending against GDP, it has gone up ... Very little has changed over the three years of this Coalition Government despite the promises you would tackle the Budget emergency.

“What was the point of your three years in government? And why should voters re-elect you?”

Since last year’s Budget, the deficit has blown out by a further $36.3 billion over four years.

Mr Morrison was quick to respond that the Budget provided for the national deficit to be reduced to $6 billion by 2020, with government spending to come down to 25.2 per cent of GDP.

“We are not spending more than we save, Leigh, and we’re not increasing the tax burden on the Australian economy.”

And he kept the mood light, responding to her doubt-casting exercise by quipping: “You say maybe I’m being a little pessimistic. I’ll cheer you up though.”

“Unrealistic, me? Never.”

But the viability of doing so hangs on a range of economic preconditions, and Sales queried whether the Budget’s forward estimates would stack up.

“You pin a lot on achieving growth, but Treasury warns low inflation, low wage growth and productivity are a major threat to the growth outlook,” Sales challenged.

“Are you not being a little bit optimistic?”

Mr Morrison replied that he was being “realistically optimistic”, and that the Government’s enterprise tax plan and other measures would boost GDP by 1 per cent— $16 billion.

He said economic forecasting was consistent with international figures and had been revised to account for recent events.

But Sales raised a Treasury warning that the nation would need to dramatically lift productivity growth if Australians’ living standards were to be preserved.

“It notes it would be greater than the lift caused by the major economic reforms of the 1980s and 1990s,” she said.

“Where is our economic reform in this Budget that rivals those era’s reforms?”

Mr Morrison cited the Government’s adoption of the Harper report, including reforms to misuse of market power rules that would “give small business greater opportunities to compete out there”.

“Those were big reforms which were kicked into the long grass for 10, 20 years and the Turnbull Government adopted them,” he said.

“Where’s that surplus you guys were talking about?”

Asked if this was on par with floating the dollar, which then Treasurer Paul Keating did to kickstart the economy in 1983, Mr Morrison replied: “I think it is the equivalent and that’s what Professor Harper thinks as well.”

Sales raised this afternoon’s Reserve Bank of Australian decision to stem deflation by cutting the cash rate to 1.75 per cent as a potential sign of economic gloom ahead.

“Isn’t that evidence they don’t quite share your optimistic view of the health of the economy?” she asked.

But Mr Morrison stood firm, arguing that the RBA was merely focused on achieving its inflation figure goal.

“What the bank did today has been very much about inflation,” Mr Morrison said.

“They have an inflation target of between 2 and 3 per cent ... Looking at that inflation target and where the most inflation numbers have come in, they’ve formed an assessment they’re in a position to make the change to rates they have.

“They’ve been able to do it because their view is after the changes that the banking regulator, APRA, late last year, which has cooled off what we have seen in some of the hotter-running housing markets they feel they can make that change to rates without seeing the overheating return.”

“Jobs and growth.”

“The Reserve Bank Governor was clear when he said the economy was transitioning well,” Mr Morrison added. “In my discussions with him that has been reflected in that discussion.”

Asked why the Australian public should re-elect his Government, Mr Morrison replied: “We have a national economic plan for jobs and growth to support jobs and growth from the mining investment boom to the more diversified economy.

“We set that out tonight with tax cuts for small business, a defence industry plan, backing innovation and science, including start-ups for new small businesses, ensuring the Budget is moving back towards balance and we can afford the investments in health, education, roads, dams, all these things necessary to take us forward.

“Australians know the challengers are great, but this is an economic plan up to that challenge and we’re ready to put it in place.”

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