Turnbull Seeks $4.6 Billion in Budget Savings Via ‘Omnibus Bill’

  • Australia aims to rein in deficit, protect AAA credit rating
  • Prime Minister challenges Labor opposition to pass measures

Prime Minister Malcolm Turnbull will introduce an “Omnibus Bill” that bundles together savings proposals the opposition has indicated it will support, as he seeks to rein in Australia’s budget deficit and stave off rating agencies.

In extracts of a speech to be delivered Wednesday, Turnbull said the budget bottom line outlined by the Labor party during the election campaign relied on more than A$6 billion ($4.6 billion) of savings measures proposed by his government. He said he will test that commitment to balancing the budget by introducing the legislation after parliament resumes on Aug. 30.

“Nobody should underestimate the importance of this moment as a test of the capacity of our political system to make the right calls on the nation’s behalf,” Turnbull said. “Very soon after the election, the ratings agencies sent unambiguous signals that there is still much to be done in getting the nation’s finances in order.”

S&P Global Ratings last month cut the outlook on Australia’s AAA credit score to negative from stable, saying the federal election result potentially dented the government’s prospects for reining in a deficit forecast to reach A$37.1 billion next year. Moody’s Investors Service reaffirmed Australia’s equivalent Aaa rating with a stable outlook on Wednesday, and said it expects the country’s economic resilience to endure in the uncertain international environment.

The prime minister, who was returned to office with a razor-thin majority, said the global economy was arguably in the worst shape since the 2009 recession. Growth is slowing worldwide and uncertainty is rising, and with it a rise of protectionism and inward-looking ideas in response to “a sense of disenfranchisement" among people who feel left behind by rapid economic change, he said.

“Political responses to this mood of disaffection can have the potential to destabilize global growth, perhaps even reversing some of the spectacular gains we have made over recent decades through open markets and free trade,” he said. If “we falter in our plan to transition the economy, there is a real risk of Australia falling off the back of the pack of leading economies.”

Turnbull rejected Australia’s Lucky Country tag, whereby optimists believe its resources and proximity to Asia will allow the nation to bumble along comfortably. This is no time to pretend “that the good times will just keep rolling no matter how much you tax, how much you borrow, how much you spend,” he said. “That is not how it works in the global economy of the 21st century.”

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