Hockey Says Australian Budget Worse Since Pre-Election Statement

Australian Treasurer Joe Hockey said the nation’s budget has worsened since a pre-election statement less than seven weeks ago as the new coalition government announced the final deficit for last fiscal year.

“The presented numbers in the pre-election economic and fiscal outlook are different to what exist today,” Hockey told reporters in Canberra today in his first press conference since the election. “There has been a further deterioration in the budget. We are methodically going through every line item of the budget and identifying where the numbers are robust and also, appropriately, looking at some of the forecasts.”

The coalition, which ousted Labor on Sept. 7, is pledging to cut red tape and lower taxes to boost the $1.5 trillion economy as a China-led mining investment boom crests. Hockey is grappling with rising unemployment and cooling growth as a high currency hurts manufacturing and service industries.

Treasury said in its pre-election outlook released Aug. 13 that the federal deficit will widen to A$30.1 billion this fiscal year that ends June 30, 2014, and is no longer projected to return to balance in 2015-16. The coalition had said before the election that Australia faces a budget emergency.

“The numbers that were released in the economic statement have deteriorated,” Hockey said. “I’m not going to speculate on it, but I can say to you that they have deteriorated.”

Rate Cuts

Reserve Bank of Australia Governor Glenn Stevens and his board have cut the benchmark rate by 2.25 percentage points in an almost two-year easing cycle to a record of 2.5 percent to help revive non-resource industries.

The budget shortfall in the 12 months to June 30 was A$18.8 billion ($17.6 billion), the government said today in announcing the final budget outcome for 2012-13. The previous Labor government abandoned a surplus pledge in December last year as revenue failed to meet projections.

“These are the Labor party’s numbers,” Hockey said of the deficit last fiscal year. “This is a historic figure.”

Since the election, a Westpac Banking Corp. and Melbourne Institute survey showed consumer confidence rose 4.7 percent this month to the highest level since December 2010 as the prospect of a change of government and lower rates boosted sentiment. Business confidence surged last month to the highest level since May 2011, with sentiment lifting in all industries, according to a separate survey from National Australia Bank Ltd.

The final budget outcome showed general government sector net debt was A$153 billion.

The new government, which is yet to announce when parliament will reconvene, needs to legislate before the end of the year to raise the nation’s debt ceiling, Hockey said. That will be one of its legislative priorities in the first week of parliament sitting, along with laws to repeal a tax on mining profits and the carbon-pricing mechanism, he said.

“I’m advised that we’ll go extremely close to the debt limit of A$300 billion before Christmas,” Hockey said. “We will deal with it.”

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