Finance Minister Mathias Cormann has moved to reset the budget debate, calling for a fiscal "reality check" about the state of the nation's economy and warning of a serious corrective action in future to protect Australians' living standards.
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Hockey says poor gaffe was misreported
Were the Treasurer's comments about poor drivers misreported? You be the judge.
In an address to the Sydney Institute that builds on Treasurer Joe Hockey's warning of "emergency" action and a Queensland-style austerity budget if structural reforms such as the $7 GP fee, higher education and welfare changes are not passed, Senator Cormann said the budget debate should not be a "spectator sport" and that "this is no game".
The Finance Minister pushed back against media "noise" about the budget timetable, pointing out that crucial appropriation bills had passed, as had a $7.6 billion, four-year cut to foreign aid and the tax levy on high-income earners.
He said suggestions the budget was unfair were "nonsense" – despite Treasury numbers released to Fairfax Media showing the budget cuts were inequitable – declaring "what is unfair is to promise what you cannot deliver".
The tough talk comes before Parliament resumes next week and after Mr Hockey, his staff and Treasury officials have criss-crossed the country for a series of budget-related meetings with the Senate crossbench.
"A number of the measures that are the subject of the most intensive post-budget debate are not due to take effect for some time," Senator Cormann said. "So there is still ample time to keep engaging with the Senate crossbenchers.
"No government in recent political history had passed all of its budget measures through both houses of Parliament by the end of August."
The federal government has so far failed to secure support for a number of budget measures that will cut spending and raise revenue and the Palmer United Party has, so far, signalled its unwillingness to compromise on many of those measures.
But Senator Cormann pointed out the GP fee was not due to start until July 1, 2015 and higher education deregulation until 2016.
He vowed the Abbott government was "committed to the marathon" that was passing the budget.
Treasurer Joe Hockey, who has kept a low profile since apologising for an embarrassing gaffe that "the poorest people either don't have cars or actually don't drive very far in many cases" while arguing the $2.2 billion fuel excise measure was progressive, re-emerged on Tuesday to argue his comments had been misinterpreted and to press the case for his budget.
"Australia cannot continue to borrow $1 billion a month – 70 per cent of it heading overseas as repayment of the interest," he said. "We have always said that we've prepared to negotiate with sensible people ... these reforms that still need to be delivered as part of the budget are the ones that are going to set us up for the future."
Against a backdrop of below-trend economic growth, rising unemployment, low consumer confidence and plateauing business investment, Senator Cormann warned that Australia was in a much weaker fiscal position than in 2007.
"We are more exposed and less resilient as a nation today than we could be, should be and can be again to deal with any global economic challenges which may come our way in the years ahead," he said.
Labor was in "complete denial" about the state of the nation's finances, Senator Cormann said, but when the Coalition returned to power federal spending as a proportion of gross domestic product had risen from 23.1 per cent to 25.9 per cent and would hit 26.5 per cent in a decade.
That trajectory, combined with falling tax revenues, translated into a growing fiscal gap and mounting public debt.
The challenge for Labor was to explain if they were still committed to a budget surplus and, if so, how they would achieve it.
To date, the Palmer United Party has indicated it will oppose the GP co-payment, rise in fuel excise, education reforms and increase to the Pharmaceutical Benefits Scheme co-payment.
Labor was scathing of the government’s shift in rhetoric on Wednesday, describing it as “incoherent, illogical and inconsistent”.
Shadow treasurer Chris Bowen said Mr Hockey’s language about a budget emergency was now no longer even in sync with the case being put by his Finance Minister.
“The government can’t even get simple messages straight,” Mr Bowen said.
Mr Bowen added that while senior ministers Julie Bishop, Peter Dutton and Christopher Pyne had suggested the need for compromise in their portfolios, Mr Hockey had failed to produce a “coherent” strategy of his own.
“He’s been in hiding for much of the week, he came out of hiding yesterday to put his foot in his mouth again by claiming his words were twisted on the matter of the impact of petrol tax on low income people,” Mr Bowen said.
“The Treasurer just can’t get a straight story.
“He can’t get a straight story for the Parliament or for the people.
“No wonder people have lost confidence in this Treasurer, including his own backbench, in this Treasurer’s ability to prosecute a fiscal strategy.”
With Lisa Cox, Fergus Hunter