IMF underscores 2012-13 surplus imperative

Friday, 16 November 2012

Friday, 16 November 2012


Labor is continuing its Budget deception by refusing to repeat its guarantee to return the Budget to surplus this year. 

When offered the chance last night, Julia Gillard, yet again, did not repeat her previous assurances that the Budget would return to surplus in 2012-13. Julia Gillard and Wayne Swan have promised to achieve this on over 200 occasions. 

All Julia Gillard could offer was to say that “Australia’s budget is one of the seven economic wonders of the modern world.”  For Labor, the eighth wonder of the economic world will be delivering an honest surplus, and coming clean on how they will fund their $120 billion black hole will be the ninth.

This morning the IMF underscored the importance of the Budget returning back to an honest surplus. The IMF noted that the authorities acknowledged:

“Returning to surplus and maintaining fiscal discipline would therefore be important for sustaining investor confidence in the strength of Australia’s public finances and signalling the government’s commitment to maintaining its fiscal strategy.”
(Source: Australia: 2012 Article IV Consultation—Staff Report, p9)

The IMF further underscored the risk the Government took in building their Budget on the back of the resources sector. The IMF said:

“Staff noted that the growing importance for the economy of mining exposes government revenue, more than in past years, to swings in commodity income.”
(Source: Australia: 2012 Article IV Consultation—Staff Report, p11)

Labor fails to remember that the last time they delivered a Budget surplus was in 1989-1990, and in the last four years they have delivered cumulative deficits of $172 billion, during the highest terms of trade on record.

The IMF also made it clear that the record terms of trade experienced by Australia were unrivalled against comparable economies.


(Source: Australia: 2012 Article IV Consultation—Staff Report, Figure 1, p23)

Returning the Budget to surplus will restore much-needed confidence in the Australian economy. Only through running consistent surpluses can Australia start paying down Labor’s almost $145 billion of net debt.