The Government has rejected an Opposition request to issue any forward Budget estimates for 1996-97 and later years, claiming this would bring the estimates out of the normal Budget cycle. Richard Wood says revised forward estimates should be available within the normal Budget cycle, and were made available at the start of the 1993 election.
AT a time when both major parties are making election promises that are adding to Commonwealth Budget expenditures and the deficit, it is vital that analysts have access to the official estimates for the Budget and the economy so authoritative assesments and critiques can be made of the possible future implications of the parties' policies.
This is all the more important given the now generally recognised need for the Commonwealth to become a net saver in order to reduce the constraints on private sector growth imposed by Australia's high current account deficits and high real interest rates.
Both parties need to state how and when they propose to achieve the "structural" surpluses that indicate that the Commonwealth has become a net saver. Unfortunately, the Government is not providing the information needed to allow an informed appraisal.
The contrast in this regard with the 1993 election provides a striking indication of the decline in the Government's fiscal responsibility.
After announcing the election in 1993, the Prime Minister, Mr Keating, almost immediately launched the Investing In the Nation statement on 9 February, which included a range of measures mainly designed to improve the competitive position of small and medium-sized business. These measures included a reduction in company tax from 39 per cent to 33 per cent and a new general investment allowance of 10 per cent.
The same day, 9 February 1993, the then Treasurer, Mr John Dawkins, and the then Minister for Finance, Mr Ralph Willis, issued a joint statement that revealed that the estimated Budget deficit for 1992-93 had increased by $2.5 billion to $15.9 billion.
Just as importantly, the statement also contained upward revisions to the forward estimates of expenditure for 1993-94 to 1995-96 as published in the August 1992 Budget, as well as new forward estimates for 1996-97. These revisions reflected changes due to estimated slower growth as well as the effect of policy decisions since the 1992-93 Budget.
FOR the 1996 election, the Prime Minister again started by launching a new policy -- this time
on youth employment -- after announcing the election. There, however, the similarity ends.
While the Treasurer, Mr Willis, has already issued revisions of the estimates for the current financial year for both the Budget and the economy, there has been no revision of the forward estimates of expenditure, revenue and deficit published in the May 1995 Budget for 1996-97 and the subsequent two years.
This failure has occurred even though the mid-year Budget review process has already been undertaken by Treasury and Finance and revisions of the forward estimates must therefore exist in some form.
Mr Willis says he has not received any revisions of the forward estimates. However, in order for Mr Willis (and the Finance Minister, Mr Beazley) not to have "received" revisions of the forward estimates, either the minister(s) or their office staffs must have instructed respective departmental officers not to forward them.
Such an instruction must have been given or else the Treasury and Finance departments would have forwarded them.
In short, it is simply farcical for Mr Willis and Mr Beazley to claim that the best Budget estimates available for 1996-97 and the next two years are those published in May 1995.
Private-sector forecasters estimate that the Budget deficit for 1996-97 could now be as much as $6 billion-$7 billion, compared with the official May 1995 estimate of a surplus of $3.4 billion.
Such an upward revision would imply a "structural" deficit of around $9 billion-$10 billion in 1996-97 as well as in the current financial year. For the Commonwealth to be a net drawer on savings to this extent would be unacceptable and would likely result in the economy continuing to underperform as a result of uncertainty about the Government's capacities to pursue policies that produce sustainable growth.
So, Mr Willis and Mr Beazley, how about producing those missing estimates which we all know are sitting in Treasury and Finance files? This is the necessary first step to allowing the electorate to make an informed assessment of the macro implications of both parties' economic policies.
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