A LEADING economist believes the coalition will need to find $30 billion of additional savings over four years if it is going to produce a “better” bottom line than Labor.
Bank of America Merrill Lynch economist Saul Eslake says while this is considerably less than the $70 billion “black hole” suggested by the Labor government, it is still a substantial amount.
He calculates the coalition has committed to specific savings measures so far of nearly $13.5 billion over the four years to 2016/17, rather than the $17 billion claimed by the opposition.
He also questions whether the coalition should be aiming for a “better” bottom line than Labor, which is forecasting a surplus in 2016/17.
“We believe there is no need to be unduly dogmatic about how quickly the budget returns to surplus,” Mr Eslake said in a report to clients.
He said net debt was relatively low compared to other advanced economies at 12.7 per cent of gross domestic product.
“We think that former treasurer Wayne Swan was correct to have abandoned his long-standing commitment to achieving a surplus in 2012/13,” he said.
Mr Eslake said Mr Swan’s successor, Chris Bowen, was also correct to have allowed the majority of the revenue write-downs since the May budget to be passed through to the bottom line.
“When the economy is growing at a below-trend pace, and unemployment is rising, and when there is no compelling argument that public debt has reached dangerous levels, it does not in our view represent good economic policy to undertake fiscal policy actions which would detract from economic growth,” he said.
Quizzed on the findings, shadow assistant treasurer Mathias Cormann said Mr Eslake was not aware of the coalition’s assumptions, the underlying methodologies or principles that underpin its policies.
He said the coalition would release its full list of policies and their costs, and their full list of savings and their value in “good time” before the election.
“What it will show that under the coalition the budget will be in better shape … than it would be under Labor,” he told Sky News.
Finance Minister Penny Wong said the economist’s analysis showed the coalition must have “hidden cuts” to pay for its policies.
“More announcements are expected from Tony Abbott before election day that will worsen his bottom line even further,” she said in a statement.
“Where will Tony Abbott’s hidden cuts come from next?”
She reiterated calls for the coalition to release the Parliamentary Budget Office’s full costings of its policies. – AAP
