Treasurer Joe Hockey has defended the Government’s paid parental leave (PPL) scheme, amid Labor’s assertions he cooked the books to make the budget forecasts look worse than they are.
The Coalition’s Mid-Year Economic and Fiscal Outlook yesterday revealed the economy is in dire trouble with a deficit blowout by next June of $47 billion.
It paves the way for projects to be slashed, with Mr Hockey warning “difficult choices” will have to be made to “eliminate” wasteful spending.
Mr Hockey says the Coalition’s PPL, which gives women earning up to $150,000 a year their full wage for the period of leave, including superannuation, will not be trimmed despite increasing concerns about its cost.
The 26-week replacement wage scheme is costed at around $5.5 billion a year from July 1, 2015.
Some business leaders say the promise is excessive and should be cut because of economic conditions.
But Mr Hockey has told the ABC’s AM program the scheme was an election promise that has been factored into the budget.
The fact is the paid parental leave scheme actually improves productivity by improving participation in the workplace,” he said.
“The PPL… is fully funded – fully funded and more – in our budget. So we’ve actually done the yards on finding the savings to pay for a program that improves productivity.
“The bottom line is, if we want a stronger economy we have to improve our productivity growth.
“We need to be able to get more out of economy, better utilising each unit of labour, and that is exactly what the paid parental leave scheme helps to do.”
Labor warns of ‘deep and brutal cuts to come’
Labor’s treasury spokesman Chris Bowen says the Coalition is laying the groundwork for a significant reduction in spending.
“This is softening up for very deep and brutal cuts to come next year,” he told ABC News Breakfast.
“We have seen the Government try to spin this as somehow a legacy of the previous government, when their own document tells us that 60 per cent of the increase in this year’s deficit comes from their own decisions.
“When you look closely… $29 billion of the writedowns come from changes in methodology or forecasting, and changes to predictions about spending.
“So this is a Government which really is saying one thing before the election and doing something very different after.”
Mr Hockey rejected Labor’s claim that the figures have been padded in order to build the case for big cuts.
“That just goes to prove that Labor doesn’t understand what they’re talking about and that’s how we got into this mess in the first place,” he said.
“The fact of the matter is you cannot have forecasts that drop the unemployment rate from 6.25 per cent to a 5 per cent in one year, with a 3 per cent economic growth figure.
“It’s just nonsensical in that sort of circumstance.
“So that’s one of the reasons why Labor kept claiming that in four years’ time they would deliver a surplus, because they kept massaging down the unemployment rate to a level that was not real.
“I want the facts out there because only by seeing what the real state of play is, Australians are going to fully understand what the mess is that we’ve been left, thanks to Labor, unless we can take corrective action in the near future.”
Early blowout in NDIS costs
Early data shows the NDIS is costing more than expected, with demand for the scheme greater than forecast.
Finance Minister Mathias Cormann said yesterday the Government is committed to delivering the NDIS in the most efficient and cost-effective way.
“There is some work being done now by the minister responsible, Minister [Mitch] Fifield,” he said.
“We are having conversations now with the states to ensure the efficiency and cost effectiveness of this important commitment can be maximised.”
Mr Hockey said the Government has to find ways to deliver services within the existing budget framework.
“As the minister responsible for the NDIS has already identified, even on the pilot program there has been a massive blowout in costs,” he told AM.
“That’s because Labor judges the performance of government activities on the amount of money that you throw at them, rather than the actual outcome for people.
“We’re focused on the outcome and what we’re going to do is make sure that there’s value for money for Australia.
“You will see the proper rollout of the NDIS. It hasn’t started in full yet.
“But what I can tell you is that Labor got it all wrong when it comes to the rollout of the pilots.”
The previous Labor government committed $14.3 billion over seven years to the NDIS in the 2012-13 budget.
The policy had bipartisan support and passed Parliament in May.
Opposition spokeswoman for families Jenny Macklin is demanding the Government rule out capping support or slowing the rollout of the scheme.
“I want Mr Abbott and Mr Hockey to come clean and to say to people with disability there will no cuts to the National Disability Insurance Scheme, there will be no cap on the amount of money that can be spent to support somebody who is severely disabled,” she said.
“There is no evidence whatsoever that it is ineffective or inefficient.
“It has only just started and people with disability need additional care and support, they need the extra money to make sure that at last people with disability get the support that they deserve.”
But Senator Fifield says the Coalition will deliver the scheme and Ms Macklin can scaremonger all she likes.
‘No free lunches’
On last night’s 7.30 program, Mr Hockey warned there would be “no free lunches” from the Government.
“Spending reform will inevitably require difficult choices about the policies that Australians need now and in the years to come,” he said.
“Australians will have to adjust their expectations of what government can sustainably provide otherwise our nation’s prosperity and our people’s quality of life will be at risk.”
Net debt is forecast to be $191.5 billion in 2013-14 and reach $280 billion in 2016-17.
The Government says budget blowout is due to “essential steps” it had to take, which include an $8.8 billion grant to the Reserve Bank and an extra $1.2 billion to pay for offshore asylum seeker processing.
The Government was unable to abolish the Gonski school funding agreements last month after protests from the states and territories.
But it now says that training centres, mostly based in high schools, will be scrapped to contribute $1 billion to Gonski.
This article first appeared on ‘ABC News’ on 18 December 2013.