Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

I confess that I genuinely wanted last night's budget to be a good budget. After five budgets of overblown rhetoric and broken promises from this Labor government, I believed that Australia's finances were in a mess. I wanted the Treasurer's sixth budget to set us straight. I expected he would come clean about the state of play. I expected that he would identify the reasons why the budget was in a mess and would admit that he had basically got the numbers very wrong—very wrong last year and the year before and the year before and the year before. I expected he would lay down a believable pathway to surplus, that he, as Treasurer, would restore the sustainability of the nation's finances. But I was disappointed, and I think many Australians were disappointed. I do not have any confidence that the numbers and the promises in the Treasurer's sixth budget are any more believable than they were in his previous five budgets.

Last week, the Leader of the Opposition and I laid out benchmarks for what we believe would make a good budget. The first requirement was honesty. But straight-up in his budget speech last night, the Treasurer began the spin and excuses. Faced with his broken promise to deliver a surplus this year, he talked about the high Australian dollar 'weighing more heavily than expected on tax receipts'. As I said before, the one assumption the Treasurer got right in last year's budget papers was the Australian dollar. In last year's budget the four-year assumption that underpinned the numbers was an Australian dollar of US103c, and it has remained around there. In the previous budget it was a four-year assumption of 107c. In MYEFO, released last October, when he was still predicting a surplus, the Treasurer said:

The exchange rate is assumed to remain around its recent average level … a [US] dollar exchange rate of around 102 US cents.

The Australian dollar has subsequently been little different to the forecast—today it is actually weaker, under parity with the US dollar—so the Treasurer cannot use the Australian dollar as an excuse for his budget chaos. His own budget papers also show there is no shortfall in revenue. Next year revenue will be $80 billion higher than the last year of the coalition government—no shortage there—but spending will be $120 billion higher than the last year of the coalition. But in real terms, the fact is that in last year's budget revenue rose six per cent; this year it is projected to rise seven per cent; next year it is projected to rise 6½ per cent and so on. With any business that is having a six to seven per cent increase in revenue and is still under water, surely the directors would be sacked? But the government keeps overestimating revenue.

Last year I described revenue forecasts as a 'magic carpet ride' in my address to the Press Club: an estimated $39 billion increase in revenue that would turn a $44 billion deficit into a $1.5 billion surplus. Of course, the government were wrong. Now they are basing forward estimates for revenue from the carbon tax and the mining tax on equally ridiculous assumptions. Net receipts from the MRRT are forecast to be just $200 million this year. That is less than 10 per cent of the $3 billion forecast in last year's budget. But, despite this massive shortfall and widespread views that the commodity price boom is fading, MRRT revenue is forecast to rise strongly over the forward estimates to $2.2 billion in 2017. So the government wants us to believe that revenue will be less than 10 per cent of the forecast this year but then will rise by a factor of 10 over the next four years.

The forecasts for the carbon price also stretch credibility. The carbon price scheme links to the European system from 1 July 2015. Overnight, forward prices for European carbon permits in 2016 were at $5.57 at current exchange rates. The carbon tax revenue is based on $12.10 in 2016, a marked reduction from the originally forecast $29 a tonne. That looks pretty high. Surely, if you were preparing your budget numbers you would do it on the basis of what appears to be the most likely price today. Even stranger: the carbon price is projected to rise in a linear fashion to $18.60 in 2017 and back up to the model price of $38 per tonne by 2020.

See this speech in context