Julia Gillard breaks third promise as $1 billion Budget surplus axed

[SConcierge]

In the famous words of Gomer Pile "Suprise surpise surpise" LOL


THE Gillard Government has dumped its sacred election promise to deliver a Budget surplus, saying it would have put jobs and the economy at risk to try and keep it.

The broken vow comes after Julia Gillard abandoned the "no carbon tax" pledge and scrapped her opposition to Pacific Island detention centres for asylum seekers.

Announcing the embarrassing backdown, Treasurer Wayne Swan blamed a $3.9 billion "sledgehammer hit" to revenue between July and October caused by weak company profits.

He won praise from economists, business leaders and the Greens, with top Budget watcher Chris Richardson saying it would have been "dumb to chase the surplus and damage the economy".

Credit rating agency Standard & Poor's said it would not change Australia's AAA credit rating.

But Opposition Leader Tony Abbott said the announcement in the shadow of Christmas was another failure by Labor that showed it could not be trusted to manage the economy or tell the truth.



Ms Gillard and Mr Swan had repeatedly said the surplus was a "guarantee" and would be delivered "come hell or high water" because it was vital to taking pressure off the cost of living. Last year the PM said "you can't run this country if you can't manage its Budget".

Mr Swan revealed he had a long discussion with Ms Gillard, who is on holidays, and other ministers before revealing the surplus was now "unlikely".

"I don't think it would be responsible to cut harder or further in 2012-13 to fill a hole in the tax system if that puts job or growth at risk," he said. "If the worst thing that people say is we got the economics right again but fell short on the politics, well I just say, so be it."

Mr Swan, who has already slashed welfare for single parents, made cuts to the baby bonus and curbed the private health insurance rebate to protect the surplus said it was not in line with Labor values to pursue more cuts.

The Treasurer, who has not delivered a surplus in his five Budgets, said the "aftershocks" from the global financial crisis that had wiped $160 billion from revenue over five years were still being felt.

The most recent update of the Budget just two months ago had predicted a $1.1 billion surplus, down from the $1.5 billion announced in the May Budget.

Economists now believe that it could be a deficit of $10 billion.

Mr Swan refused to say what the projected deficit was likely to be, saying Treasury officials would have a look with "a fresh set of eyes in the new year".

He rejected Opposition claims it was due to wasteful spending, saying spending was down by $1.3 billion and every dollar spent since mid-2009 had been matched by a cut.

Mr Swan said the Government was still committed to revealing how it would pay for increased education funding and the rollout of the National Disability Insurance Scheme in next year's Budget.

Mr Abbott said after boasting for three years about the surplus, it was another failure by Labor.

"You just can't trust this Government to manage the economy and you just can't trust this Government to tell the truth," he said. "For three years they've been saying that this surplus was the badge of their economic credibility. Well, they don't have it any more."

Shadow Treasurer Joe Hockey said Labor was trying to cover up its wasteful spending by "taking out the garbage five minutes before Christmas".

[SConcierge]

Here is what Labor had previously promised:

Treasurer Wayne Swan:
"We'll be back in the black by 2012/13, as promised." (May 2011)

"The government remains absolutely committed to delivering our return to surplus as we planned." (August 2011)

"We've nailed our colours to the mast." (February 2012)

"Despite the tough global conditions, we remain determined to return the budget to surplus in 2012/13, and we will get there." (March 2012)

Prime Minister Julia Gillard:

"My commitment to a surplus in 2012/13 was a promise made and it will be honoured." (April 2011)


"We stand by the predictions, the entries in the Mid-Year Economic and Fiscal Outlook. We stand by the figures and we're on track to deliver a budget surplus." (November 2012)

[SConcierge]

Here is what Labor had previously promised:

Treasurer Wayne Swan:
"We'll be back in the black by 2012/13, as promised." (May 2011)

"The government remains absolutely committed to delivering our return to surplus as we planned." (August 2011)

"We've nailed our colours to the mast." (February 2012)

"Despite the tough global conditions, we remain determined to return the budget to surplus in 2012/13, and we will get there." (March 2012)

Prime Minister Julia Gillard:

"My commitment to a surplus in 2012/13 was a promise made and it will be honoured." (April 2011)


"We stand by the predictions, the entries in the Mid-Year Economic and Fiscal Outlook. We stand by the figures and we're on track to deliver a budget surplus." (November 2012)

One labour minister said that there were undiscovered Indian tribes that could have told Gillard it was never going to happen!

[SConcierge]

I love this ones says it all really



WAYNE Swan had been hoping desperately to break a 23-year hoodoo. A Labor government had not delivered a surplus since Paul Keating was Treasurer in 1989.

But, in the shadow of Christmas, he's had to give up the dream, break an election promise and admit he's now likely to chalk up his fifth deficit, with the red ink totalling more than $170 billion.

It was Labor that made getting the books back into the black a test of its economic credibility.

It was a "guarantee", said Julia Gillard . It would be delivered "come hell or high water", said Swan.

"You can't run this country if you can't manage its Budget," the Prime Minister said in April last year. They are the political quotes that will now haunt the ALP and be used by the Opposition to attack the competency and truthfulness of the Prime Minister.



In dumping the pledge of a surplus in 2012-13, the Treasurer says he is putting jobs and economic growth first. That is exactly the right decision by a political leader.

What use is a surplus to the manufacturing worker who loses their job because of the squeeze put on the economy to achieve some political Holy Grail?

Another round of slash-and-burn pain just to make the books look good would not be in the national interest.

Swan's backdown is being cheered on by business leaders and the Greens - who never agree on anything - as well as a bore of economists.

The trigger was the monthly update of the accounts showing in the first four months of the financial year a $3.9 billion shortfall in revenue, which Swan said was "a sledgehammer hit to our revenues".

He says it is not because the Government is spending too much, in fact he says spending is down by $1.3 billion as well. It just hasn't collected the money it expected because the unique combination of low commodity prices and a high dollar has crunched business profits and there's less tax to be paid.

The Opposition's counter claim is that the Government is spending $100 billion a year more than it did five years ago and too much of it is wasted.

Swan replies that every dollar spent since mid-2009 has been matched by a spending cut. And he's still promising his next Budget will set out how the big plans to boost education funding and start the National Disability Insurance Scheme will be paid for.

There was never going to be a good time for Labor to capitulate on the surplus. It ranks up there with the "no carbon tax" pledge and not sending asylum seekers to Nauru and Manus Island on the scale of broken promises.

There will be suspicion about doing it five days before Christmas or, as shadow treasurer Joe Hockey says, "taking out the garbage five minutes before Christmas".

But having decided to bite the bullet, Labor did not want to start the 2013 election year with a broken promise, although that won't stop Tony Abbott from reminding voters of the fact every chance he gets.

In May and October, Swan was still desperately trying to keep the surplus alive by cutting welfare for single parents, reducing the baby bonus and curbing the private health insurance rebate.

But he now faced having to inflict more pain in an election year. Labor MPs were screaming for him to drop the surplus fetish.

Proving just how big a decision this was, Swan had extensive talks with Gillard, who is on holidays, and other ministers before it was decided to announce the politically embarrassing backdown.

Swan admitted as much by saying if the politics was bad, then "so be it".

He will redouble his efforts to sell the message that Australia's economy is the envy of most other countries, with stronger growth and lower unemployment, and the Budget is in much better shape than countries in Europe or the United States, where they are trying to avert going over the "fiscal cliff".

HE will be hoping an interest rate cut from the Reserve Bank early next year will mean much more to voters than whether he has a surplus or deficit.

The Opposition plans to use Gillard's own words against her. Take these two examples:

"My commitment to a surplus in 2012-13 was a promise and it will be honoured," Gillard told the Sydney Institute on April 13, 2011.

"It's vital to get the Budget back into surplus and back into the black. That's what this Budget has done. That is the best thing we can do to help families with cost of living pressures," she said on May 11 last year.

Labor inherited no net debt and a surplus of $20 billion from Peter Costello in 2007 and, to get voters to trust it with the economy, Kevin Rudd said he wore with pride the badge of "economic conservative".

The global financial crisis changed all that. Labor's response - on the advice of Ken Henry, who was picked by Costello to run the Treasury - was to "go hard, go households" and spend its way out of recession.

A $42 billion mini-Budget aimed at nation-building and jobs plunged the nation's finances into the red but Labor said it was only a "temporary deficit". Five years on, the deficit remains.

It may be the right economic call, but it's tricky politics for a PM already under fire for breaking promises.

In a $400 billion Budget there is no real difference between a $1 billion surplus and a $1 billion deficit, but it was Swan and Gillard who pumped up the political importance of the surplus.

In part, they did it because they wanted to put the blowtorch on the Coalition's rubbery Budget numbers. They've now burnt their own backsides.

[Guest]

SC, I think someone has hacked your account and they keep replying to your posts with your username!

Merry Xmas!

[stephenj]

who cares, the economic responsable action is to currently forget delivering a bonus and for hocky to say labor have a spending problem, the problem relaes back to the howard govt not spending anything on the country just accumulasting a war chest for relection, no wonder there is so much to do now, nearly 12 years of australia standing still, but the miners both in australia and overseas made great profits selling off our natural heritage?

[chook 56]

SC, I think someone has hacked your account and they keep replying to your posts with your username!

Merry Xmas!

No. It's a stutter.

[SConcierge]

who cares, the economic responsable action is to currently forget delivering a bonus and for hocky to say labor have a spending problem, the problem relaes back to the howard govt not spending anything on the country just accumulasting a war chest for relection, no wonder there is so much to do now, nearly 12 years of australia standing still, but the miners both in australia and overseas made great profits selling off our natural heritage?

LOL thats unreal well said mate, I am not pro any party my fav PM was Keating but I have to say I would like to see someone one day not to build or promise or spend money on something and say we cant afford it because it is going to put us on a hole.

But this last few years has been faulty towers, especially when they released the mid yr figures so early to show they were on track when days before they discovered they were not going to get the minning tax they thought they were going to get lol pure comedy.

Anyhow it ends next yr.

[Guest]

SC you have had 1 to many Kranskys, have you been over with ralphy or something?

Julia is the best mate, I like her. I dont like her red hair though, I dont know why her hair dresser boyfriend doesn't style it & put a colour through it.

Hey you shirt lifter Merry Christmas to ya & to our beloved Roosters.

[SConcierge]

SC you have had 1 to many Kranskys, have you been over with ralphy or something?

Julia is the best mate, I like her. I dont like her red hair though, I dont know why her hair dresser boyfriend doesn't style it & put a colour through it.

Hey you shirt lifter Merry Christmas to ya & to our beloved Roosters.

merry xmas maaaaaaaaaaaaaaaate, I love redheads but gillard is a stinker I wouldnt touch her with Ralphys kransky, less then a yr of the rubbish to go.

[Guest]

Mickey, we all love a good kransky. Not your sort though so battering your sav and eat a packet of tic tacs... I can smell your suasage breath from over here!

[Guest]

Hows the pizza oven going SC?

[Rooster_6]

who cares, the economic responsable action is to currently forget delivering a bonus and for hocky to say labor have a spending problem, the problem relaes back to the howard govt not spending anything on the country just accumulasting a war chest for relection, no wonder there is so much to do now, nearly 12 years of australia standing still, but the miners both in australia and overseas made great profits selling off our natural heritage?

I think you're missing the point here, Gillard is full of shit. Not that we needed any more confirmation, this promise should have never been made in the first place anyway. Not having a balanced budget really isn't as concerning as a lot of people want to make out, spending money was needed to help the private sector during uncertain times which still remain.

The promise to begin with was irresponsible, although she'll no doubt pay the price in the upcoming elections.

[SConcierge]

Hows the pizza oven going SC?

Ready to race mate just needs to cure for 3 weeks now

pizza.jpg

[stephenj]

rooster 6 you can cticise the minority government as much as you like until abbott gets elected its still a free country? but i would like to see some viable policies come from the current no opposition asap? all theyve got so far is turn back the boats and stop the carbon trading scheme, both unattainable options!