“The problem is that in the one breath the Prime Minister says she hasn’t got enough revenue coming in, and in the other breath, she says she wants to spend more money, much more money, in areas like disability care and education and so on,” he said.
“But the problem is that this expenditure is not sustainable over the longer term if the government has falling revenue.”
Mr Hockey said the opposition was committed to the NDIS, but the Coalition would live within its means in government.
Shadow Treasurer Joe Hockey told reporters in Sydney that superannuation and capital gains tax will be the areas hardest hit when the government tries to counter its $12 billion deficit, but refused to speculate on the Coalition’s strategies, such as the Coalition’s generous paid parental leave scheme policy.
“We are not in the business of ruling things in or out because we don’t know what we are going to inherit,” he said.
“Our signature policies are getting rid of the carbon tax … mining tax and having a fair dinkum paid parental leave scheme, they are there and we will deliver on them,” he said.
Mr Hockey said the issue was the federal government was not telling the truth about the state of the country’s financial books.
“We are being extremely wise in not revealing our policies in detail now because what the government is doing is changing the numbers every day,” he said.
Elsewhere in South Australia Opposition Leader Tony Abbot said Labor is making “yet more excuses for yet more failure”.
Mr Abbott argued revenue had actually risen seven by per cent in 2012/13.
“Every day we have the government saying there is a revenue problem, and every day they are announcing multi-billion spending programs.Is it any wonder that this government has a problem?”
Ms Gillard told a conference on Monday that revenue in 2012/13 would be $12 billion less than forecast because of the continued strength of the Australian dollar.
“The persistent high dollar, as well as squeezing exporting jobs, also squeezes the profits of exporting firms. With lower profits for these companies comes lower company tax going to government,” she told the Per Capita forum in Canberra.
She said the government wouldn’t cut the budget to the bone in response, but warned that every “reasonable” option was now on the table, “even options previously taken off the table”.
As Finance Minister Penny Wong told ABC radio Australia was facing “a new economic reality”, Opposition Leader Tony Abbott accused Labor of just making excuses.
But Australian Industry Group chief executive Innes Willox said the erosion of the budget bottom line should be seen in the context of declining business activity and a slowing economy.
“The major parties should avoid plans for tax increases or spending cuts that would worsen the outlook for this already slowing economy,” he said in a statement.
TD Securities head of Asia Pacific research Annette Beacher has upgraded her forecast for the 2012/13 budget deficit.
It’s now seen closer to $25 billion – or 1.7 per cent of GDP – compared to an earlier prediction for a $10-$15 billion shortfall.
“Clearly revenues rely too heavily on corporate taxation and not enough on personal taxation, a legacy of the prior Howard-Costello government,” she said in a note to clients.
“This structure needs to change.”
However, even a $25 billion deficit would be a marked improvement on the $43.7 billion deficit posted in 2011/12 and the $47.7 billion deficit in 2010/11.
But the IMF said while Australia’s fiscal position was now weaker than expected, it was not a concern because of the country’s low level of debt.
IMF director for Asia and the Pacific Anoop Singh said with debt levels at just 10 per cent of gross domestic product (GDP), Australia was one of very few countries with triple-A sovereign debt ratings from the three major credit ratings agencies.
“The next budget will lay out the government’s plan to achieve a strong fiscal position … essentially the government has remained keen to return the budget to surplus, and this is a praiseworthy objective that we have supported,” he told a news conference in
As well, the IMF’s Regional Economic Outlook for Asia and the Pacific, released on Monday, said the Australian economy should return to trend growth in 2014, despite the damage being caused by a high Australian dollar.