Updated November 28, 2020 10:54:42With the budget just over two years old, the government has more to show for than the $6.9 billion the government promised last year.
Its estimated $7.2 billion of new spending has already been delivered and a total of $3.3 billion of spending is expected to be delivered in the next three years, including a range of measures including new housing and transport projects and a boost to the national broadcaster.
The government’s economic and financial outlook (EFO) report on Thursday showed the economy has been growing faster than in previous years, and the economy is expected by the end of the year to be worth about $4.5 trillion.
But with a $1.9 trillion deficit for the year and the budget still $1 trillion in deficit, Treasurer Scott Morrison says the Government is not “satisfied” with its spending.
“We’ve got a significant shortfall of $2.1 trillion,” he said.
“It’s a massive deficit.
And that’s because of the very large scale of the budget, but also the huge amount of debt.”
Mr Morrison says it’s now time for the Coalition to make the hard choices, including taking on more debt to finance the infrastructure spending.
But the report shows that while the Government’s fiscal position has improved, its position has been worsened by a $7 billion increase in the Medicare rebate, the biggest increase in Medicare spending since the Rudd Government’s first budget.
The Government has already spent $5.6 billion on the rebate, which has been increased by $2 billion, to $14 billion in 2019-20.
The Treasurer says the increase in spending has been due to the Medicare Rebate and that the Budget is now on track to meet the $18 billion increase.
But Mr Morrison says Australia has a “lack of accountability” on the cost of Medicare.
“There is a lack of accountability for the cost and it’s not just the government, it’s the Commonwealth as well,” he told reporters in Canberra.
“I can’t see us having a robust and fair negotiation on Medicare at this stage.”
The Government is still running $9.7 billion a year of deficits and $5 billion of deficits over the next four years, which is $5 trillion more than it was forecasting in its last EFO report.
“What the Budget has announced is a $4 billion increase to the rebate for people over 65, $2 for every $1 of tax and we’ve got $1 billion in savings for the Medicare levy,” he explained.
“The Government’s budget is now $2 trillion higher than it expected to get in 2019.”
Mr Abbott has already promised to spend $1-billion more on the Medicare Levy this year than the Coalition had predicted.
But he says the $1b increase is necessary to pay for the Government spending, despite the deficit.
“At the moment we’re on track for $5-billion in extra spending, but we’ve cut spending by $1,200 billion in real terms over the last four years,” he noted.
“That’s $5billion that we could be using on roads and schools, we could use on education.”
The Coalition says it will use the surplus for a range or infrastructure spending, including building a new rail link between Melbourne and Canberra and boosting rail connections between Sydney and Perth.
But in its latest budget submission to Parliament, the Government says it has no plans to increase spending on infrastructure, with the main focus being on reducing the deficit, which it says will be between $5 to $6 billion.
“When the budget is passed into law we will make our decisions in relation to the budget,” Mr Morrison said.