Third round of stimulus needed ... independent MP Rob Oakeshott. Photo: Andrew Meares
Independent MP Rob Oakeshott wants the government to loosen the purse strings and start a third round of stimulus now that the Labor government has all but abandoned its promised surplus next year.
Economists had welcomed the federal government's decision, saying it was not unexpected and would ease the pressure on the Reserve Bank when it makes its monetary policy decisions.
Treasury had forecast in October a $1.1 billion surplus for 2012-13, a turnaround from a $43.7 billion deficit the previous year.
The Finance Department's latest monthly statement, released on Thursday, showed cash receipts for 2012-13 so far totalled $111.6 billion at the end of October, down almost $4 billion on expectations.
The main factor was company tax revenue, hit by profit declines.
Treasurer Wayne Swan said on Thursday that he'd rather ditch the surplus than tighten fiscal policy further and risk local jobs and growth.
Mr Oakeshott applauded this move but wanted the government to go further.
"Unless there is a bumper summer, unless we really can see some increase in consumer confidence and consumer spending I do think the conversation in the first quarter next year will be one about whether to stimulate the economy with a third round of stimulus," he told ABC radio on Friday.
Ivan Colhoun, ANZ head of economics and property research, said any stimulus would be better done through monetary, rather than fiscal policy, such as through lowering the strong Australian dollar, which has putting the squeeze on the economy.
"Do we need good fiscal policy over the course of the cycle? Yes. Will we get it? I have absolutely no doubt that we will get it and I'm not worried at all that there will be a small deficit, whatever size, this year. That's pretty irrelevant for markets because of our good performance over many years," Mr Colhoun said.
Surplus 'a political argument'
Mr Colhoun said the push for a budget surplus for 2012-13 was driven by political rather than economic considerations. But attaining a budget surplus over the course of the economic cycle was still important, he added.
"So they have been doing the right thing in saying they are going to move back into surplus. What they've done wrongly is say, 'by this year'.
"What I think as a foreign investor and as an economist you want to see is Australia continuing to run a budget surplus over the course of the cycle. And there's no reason why that has to be in 2012-13. And in fact, with the world and Australia slowing down and the terms of trade coming off, I think it was actually silly to try and target a surplus this year."
Learn from Europe: Cameron
Labor backbencher Doug Cameron cautioned that Australia needed to learn from Europe, where austerity drives had taken many countries' economies backwards.
"We should not be out there arguing fiscal austerity when there are major parts of the economy still in recession and still not recovered from the global financial crisis," he told the ABC.
Independent MP Tony Windsor doesn't see the loss of a surplus as a problem either.
"To focus on the word surplus as being the determiner of being a good economic manager, I think, has always been flawed," he said.
"No impact on triple-A credit rating"
ANZ said in a research note on Friday that, as signalled by ratings agencies, a short-term delay in returning the budget to surplus was unlikely to have an impact on Australia's sovereign AAA credit rating, as long as the path towards fiscal consolidation remained clear.
"While the government will not release updated budget forecasts until early in the new year, we consider a deficit in the order of $5 to $10 billion for 2012-13 would not faze ratings agencies or markets," ANZ said.
JP Morgan economist Tom Kennedy said Mr Swan's comments meant there would be less pressure on the Reserve Bank in its easing of monetary policy.
"I think the fiscal drag will obviously be less over the current financial year and I'm assuming so into the 2014 financial year as well," he said.
"For that reason we think at the margin it takes a bit of pressure off the RBA, because now we have the two arms of policy – the monetary arm and the fiscal arm – moving in a more congruent manner, rather than going in opposite directions."
Mr Kennedy said on Thursday that a deficit was to be expected as growth moderates.
"When you look at the outlook for 2013, you've basically got growth fading ... In addition, you've got commodity prices that we think have certainly seen their peak in terms of pricing. You had very high prices for coal and iron ore in the back end of 2011 and I think the economy is still adjusting to the lower prices," he said.
"I think considering the current outlook, a deficit will certainly be what occurs with the budget."
AAP and Glenda Kwek