Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

The truth, of course, is that you need both. I can reassure Senator Leyonhjelm and the Senate that the government continues to be committed absolutely to repairing the budget mess that we have inherited from our predecessors. When we came into government the economy was weakening, unemployment was rising, and the budget was in very bad shape and was deteriorating rapidly. Just to give you an example of that, at the time of the last election spending in the final year of the forward estimates—the 2016-17 financial year—to the first year outside the published forward estimates was projected to grow by six per cent above inflation based on spending commitments the previous government locked into legislation quite irresponsibly.

In the 2013-14 MYEFO document, the half-yearly update on Labor's final budget, we showed that under Labor's policy settings debt was headed for $667 billion within the decade and rising beyond that. In order to get into surplus within three years, as you asked about, analysis in that MYEFO update shows that we would need five per cent real growth—that is five per cent growth above inflation—in order to get into a surplus position. To put that into context, that would be the strongest sustained period of growth since the late 1960s. The long-term historical growth rate is around three per cent above inflation.

The truth is that there is no easy answer here. There is no way past making an effort on the spending side. Spending growth over the current forward estimates has been contained to one per cent above inflation, down from about 3.6 or 3.7 per cent under Labor. (Time expired)