The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

12 May 2010

NO.042

Shadow Treasurer's Litany of Sloppiness a
Risk to the Australian Economy

In recent days the Shadow Treasurer has demonstrated again the very real risk his sloppiness and irrationality pose to the Australian economy.

Time and again the Shadow Treasurer has demonstrated he is willing to make any statement without regard to its accuracy or logic.

Examples of the Shadow Treasurer's recent positions (see attachment for quotes) include:

  • Setting the Government a benchmark for returning to surplus in ‘three or four years' then attacked the Government for meeting that benchmark.
  • Criticising Treasury forecasts in the 2009-10 Budget as too pessimistic, after attacking them last year for being too optimistic.
  • Demonstrating he clearly does not understand that the terms of trade are predominantly a product of international prices not domestic policy.
  • Demonstrating he has clearly not read the Budget papers by:
  • Failing to comprehend that revenues from the Resource Super Profits Tax have been dedicated to announced policies, and hence do not affect the return to surplus in three years' time.
    • Failing to notice that the Budget funded Standard Tax Deductions and tax incentives for savings out of the Resource Super Profits Tax
    • Failing to check his basic arithmetic before attacking the Budget in Parliament
  • Adopting nominal spending as the appropriate measure of fiscal discipline, highlighting spending growth in the last five Coalition budgets of nearly 7 per cent.

The Australian economy demands serious, considered and informed economic commentary from the Federal Opposition.

Regrettably Mr Hockey has done nothing but demonstrate his sloppiness time and again in his efforts to talk down the Australian economy.

CANBERRA
12 May 2010


Attachment

Government should return to surplus in "three to four years"

9 May 2010 – Insiders

HOST: What's a reasonable timeframe, a reasonable timetable for returning to surplus?

HOCKEY: Well, they could do it if they try, in three to four years.

This Time Last Year - Treasury Too Optimistic In 2009 Budget

13 May 2009 – ABC Melbourne

"The Treasury has some pretty heroic assumptions in their forecasts for how quickly we come out of this recession."

Now - Treasury Too Pessimistic In 2009 Budget

11 May 2010 – Sky

"They were saying, and we were taking their advice, as you were, that this was the end of the world. Well, it wasn't the end of the world."

Terms Of Trade

11 May 2010 – Sky News

"I think the government's assumption that we are going to have the best terms of trade in 60 years, despite the fact they're introducing a massive new mining tax, means that the numbers are unbelievable."

Facts:

  • Our terms of trade is the price we receive for our exports relative to the price we pay for our imports.
  • It is predominantly determined by international prices, not domestic policy.

Surplus Depends On Passage Of Resource Super Profits Tax

11 May 2010 – Sky News

SPEERS: But hang on, $1 billion might be only $1 billion, why are you saying they won't deliver that?

HOCKEY: Because it's based on a $9 billion a year resources tax.

Facts:

  • The revenue raised from the RSPT is directed to tax cuts for small business, company tax cuts and superannuation and infrastructure as announced last Sunday, and in the Budget the standard deduction and interest income tax discount.
  • The RSPT raises $3 billion in revenue in 2012-13 (not $9 billion as claimed above), all of which is allocated.

Nominal Spending

9 May 2010 – Insiders

"They're locking in a massive debt into the longer, and this is the key point, their two percent cap is two percent real, that's on top of inflation, so government expenditure is going to increase by their own design by around five percent this year – five percent, well above inflation."

Facts:

  • In the last five Budgets handed down by the former Government nominal spending growth averaged 6.6 per cent.

Checking Arithmetic Before Attacking

12 May 2010 – House Of Reps

"My question is to the Treasurer. I refer to the Treasurer's remarks on Radio 2GB that, and I quote, ‘the surplus in this Budget is not dependent upon the Resource Super Profits Tax.' Of the $12 billion of mining tax revenue the Treasurer claims to collect in the Budget forward estimates, on $9.8 billion is allocated for specific spending. Isn't it the case that the Treasurer's surpluses do rely on at least $3.2 billion of unallocated mining tax revenue? If not, where is the money going?"