How safe is the surplus?
Very, according to Julia Gillard. The PM has been at pains this morning to convince everyone the $1.5 billion buffer will not be blown out of the water at the first sign of trouble.
It’s a hard sell. This time last year Wayne Swan predicted the 2011-12 deficit would be $22.6 billion. In November’s MYEFO it was revised to $37.1 billion, and last night it was confirmed to be $44 billion.
According to Swan, the GFC wiped $150 billion off Australia’s tax take in the five years to 2012-13. A short time ago on Sky News Gillard pointed to this drop in revenue as proof of how hard she and Swan would fight to maintain the promised surplus.
Gillard pointed to the $33.6 billion in savings outlined in the Budget as an indication of how willing the Government was to make cuts, and made clear if revenue fell more than predicted she wouldn’t be afraid to slash more spending to protect the surplus.
Over on ABC radio the Treasurer was emphatic in his “yes” when asked if the cuts would go deeper if necessary.
Unsurprisingly Tony Abbott’s not buying it.
“This is a Government that doesn’t know how to get its own spending under control”.
Swan and Gillard have invested a huge amount of political capital in this surplus the opposition says is the size of a “rounding error”.
In fact the Treasurer said last night: “The deficit years of the global recession are behind us. The surplus years are here.”
They’ve really got no choice but to maintain it now. But at what cost?
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