This week Treasurer Scott Morrison delivered Australians a Mid‑Year Economic and Fiscal Outlook (MYEFO) statement, announcing that debt and deficit is likely to stretch for more than a decade.
Unsurprisingly, the reaction by economists was similar to the one where somebody stumbles upon a bag of raw prawns under a hot Christmas Day sun.
We said MYEFO shows the government has barely made a dent in fixing our national overspending problem, and others were equally as critical of the mid‑year statement.
Writing in The Australian, Judith Sloan pulled no punches when she said:
Let’s face it, we are stuffed fiscally. … This year’s budget deficit is going to be even higher than was expected in May — up from a tad over $35 billion to $37.4bn. Over the four years of the forward estimates, the accumulated budget deficits now total $26bn more than was expected just eight months ago, an increase of nearly one-third. Yes, I did mention we are fiscally stuffed.
Economist Peter Smith conveyed an even more dire warning in his MYEFO response:
The budget is now forecast to move into surplus in 2020-21, a year later than forecast in May. Take this with a pinch of salt. The electorate will not easily give up free stuff and politicians will toe the line to get re-elected. In the end, as in Greece, it will result in misery of one kind or another; unless, of course, beneficial external developments save the day. Fingers crossed for the Lucky Country.
Do we dare mention that prior to the supposed surplus magically appearing in 2020‑21, both major parties will be fighting two elections to win over voters with debt‑funded goodies?
There are no two ways about it: MYEFO is a stinker, and Australia’s budgetary situation is dire.