Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Hansard source

Senator Joyce, I just checked the figure you gave of $125 billion. It is actually $115 billion. As the Updated Economic and Fiscal Outlook has reported and as the Treasurer, the Minister for Finance and Deregulation and the Prime Minister announced last week, we have seen a revision down by a total of around $115 billion across the forward estimates since the 2008-09 budget, with more than $75 billion of this revision occurring since the MYEFO at the end of last year. So we have seen effectively two significant revisions down, with that revision accelerating through to the announcement of the new figures.

The sharp decline in revenue from the 2008-09 budget of $115 billion has been as a consequence of the changed forecast with respect to economic growth, and that obviously impacts revenue. I do not have the figures for comparable countries but I do understand that this is occurring worldwide. I do not have the details to hand, but comparable countries are having to deal with a significant decline in the forecast revenues over their forward estimates periods, so we are not alone in this.

I certainly know that one important factor in the Updated Economic and Fiscal Outlook has been the weight of the gathering global recession. That weight, regrettably, has been gathering momentum, and not just in countries like Japan, the US, the UK and other major trading partners; it has moved into a country like China, which is a major trading partner of Australia’s. Key emerging economies such as China and India are now expected to slow markedly. Obviously, the global commodities boom has provided significant stimulus to Australian growth and incomes over recent years. There was some discussion earlier between Senator Abetz and me about the step-down approach that Treasury has taken in terms of forecasts of revenue and the mining boom. That certainly was not expected when the 2008-09 budget was handed down. So we have seen a very extraordinarily rapid change in revenue estimates downwards.

As I said earlier, I cannot recall a period in my lifetime, other than the oil crisis back in the early to mid-seventies, when economic circumstances have changed so rapidly across the globe. That clearly has a very significant impact on the fiscal balance. If you look at the estimated fiscal balance, say, in 2008-09 and updated in the UEFO, it is minus $22.4 billion, moving to $33.3 billion in 2009-10 and then dropping back to $21.5 billion and $23.9 billion. This does not account for all of that negative fiscal balance but it certainly accounts for a very substantial proportion of it.

Progress reported.