Bushfires put surplus in doubt: Treasurer Josh Frydenberg

Josh Frydenberg says he does not know whether he can deliver the government’s promised surplus, saying it’s too early to tell the economic impact of the bushfires.

Treasurer Josh Frydenberg at a press conference at Parliament House in Canberra, Monday, January 20, 2020. (AAP Image/Mick Tsikas) NO ARCHIVING

Josh Frydenberg says he cannot guarantee he will deliver the government’s promised surplus in May, declaring it too early to know what impact the bushfire disaster will have on the economy.

The Treasurer said on Monday he was “not in a position” to say whether a surplus was improbable after Scott Morrison said last week assisting fire-affected communities was the government’s priority .

When asked if a budget surplus was unlikely, Mr Frydenberg said: “I’m not in a position to give a firm answer to that question because the full economic impact (of the bushfires) is still uncertain”.

Business Council of Australia president Tim Reed backed the government walking away from the surplus if the bushfire recovery required extra spending.

“If you look back in December, the BCA put out our budget submission and in that, we said that unless exceptional circumstances arise, we believe that the budget should be back in surplus,” Mr Reed said.

“For eight years, the BCA has been calling for the budget to … be back to surplus but even in that document, we said other than in exceptional circumstances. I don’t think there is any doubt that we are now in exceptional circumstances.”

The government went to the election with a “back in black” pledge, vowing a re-elected Coalition would bring the budget into surplus.

Opposition Treasury spokesman Jim Chalmers said the government should not blame the bushfires for “more than six years of economic incompetence and inaction”.

“The Liberals promised a surplus in their first year and every year but instead they’ve delivered six consecutive deficits,” Mr Chalmers said.

“The economy was already floundering under the Liberals before the fires hit, and net debt had already more than doubled.”

Mr Frydenberg said the economy was “very resilient” despite the unknown economic impact of the bushfires.

“We do know that obviously those communities have been absolutely devastated and that has impacted on everything from tourism to household consumption,” Mr Frydenberg.

“We have seen the trade tensions between the US and China play out and we have also seen the uncertainty generated by Brexit and I’m pleased that a few of those issues look much more positive this year than they did last year.

“What the Australian people know is that when you are responsible economic managers, you have the financial flexibility to respond to crisis and economic shocks whenever they may occur.

“This is one. This is a time when the Australian people know that their government is there to spend on the things that they need most.”

The surplus warning came as the Prime Minister unveiled a package for small businesses affected by the bushfires.

They will be offered concessional loans of up to $500,000, tax-free cash grants and financial counselling.

Last week, Mr Morrison said the surplus was of “no focus to me” as he announced an additional $2bn to the bushfire recovery effort.

“What matters to me is the human cost and meeting whatever cost we need to meet,” Mr Morrison said last week.