The Mid-Year Economic and Fiscal Outlook (MYEFO) released by treasurer Joe Hockey warns that "Australia is not living within its means" as the 2013/14 budget deficit reached $17.7 billion.
The deficit went to show that the coalition should take immediate steps to address the issues left by the former Labor government.
With the deficit, Australia had been experiencing a slow growth which resulted in a $37 billion reduction in taxes. The country's economy became sluggish expanding by a sub-trend of 2.5 per cent in 2013/14 and into 2014/15.
Unemployment is forecast to be at 6 per cent by mid-2014, increasing by 2016/17 at 6.25 per cent. Government debt was forecasted to become worse at $320 billion, continuously increasing to $460 billion by 2016/17.
Key Points of Mr Hockey's Speech to the National Press Club on Tuesday, Dec 17:
- This midyear economic and fiscal outlook I have released today, with the minister for finance, shows that Australia is now preparing to climb a challenging fiscal and economic mountain.
- I want to emphasise that no challenge is insurmountable.
- The Coalition went to the Australian people with a plan to get the economy and budget back on track.
- That is what we will do and today is the first step.
- We will fix the budget and we will deliver a stronger economy.
- But it will need a response that has the support and active involvement of the entire Australian community.
- We have inherited from the Labor Party budget deficits totalling $123 billion over the next four years and unless we take action, the budget will be in deficit for at least a decade.
- And we have inherited from Labor gross debt that will reach $460 billion within the next four years.
- Unless we take very substantial budget reform, it will rise to $667 billion over the next decade.
- This document also forecasts economic growth to remain below trend of three per cent for the next two years as the unemployment rate continues to rise to six per cent.
- That is the truth about the starting point from which we begin our mountain climb.
- Taxpayers can no longer afford old government spending priorities.
- Australians will now have to adjust their expectations of what government can sustainably provide, otherwise our nation's prosperity and our people's quality of life will be at risk.
- This midyear report incorporates the full impact of our election commitments with one exception.
- We have not included the cost savings arising from our election policy to reduce the public service headcount by 12,000 over two years through natural attrition.
- Given that the previous government cut over 14,000 public service jobs without any announcement, our proposal will be reviewed in light of the findings of the National Commission of Audit.
- The results will be incorporated into the next budget.
- There are some election commitments which are not separately identified while the detailed policy work is still being completed.
- These will be detailed in the May budget.
- Returning the budget to sustainable surpluses will not be achieved by piecemeal savings here and there.
- It will require a sustained and fundamental structural overhaul of expenditure.
- Of course, our fiscal and economic objectives must be complementary.
- All options are on the table.
- Over the next few months Australians will be asked to accept the decisions that help to make our quality of life sustainable.
- The purpose of the May budget will be to put in place the program to grow the economy, deal with the deficit and debt, and put in place a sustainable fiscal strategy for the long haul.
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