Coalition committed to first-year surplus, Hockey says

The Coalition would deliver a budget surplus in its first year in office, says shadow treasurer Joe Hockey, but managers and consumers will determine the fate of individual businesses.

Speaking at a business forum in Sydney today, Hockey said a set of medium-term budgeting rules under an Abbott government would ensure “Australia once again lives within its means”.

“Based on current data, we will achieve a surplus in our first year of office and we will achieve a cash surplus in every year in our first term,” Hockey said.

Rather than use fiscal stimulus to achieve growth, the Coalition would base its approach on cutting government waste, reducing spending and paying down public sector debt, Hockey said.

It would also lower tax, cut red tape, restructure industry and build greater ties with Asian trading partners.

However, Hockey said Australians needed to accept the “brutal truth” that managers and consumers – and not government – will determine the fate of individual businesses.

“The Coalition’s view is that government may be able to help by assisting the process of transition,” he said.

“We should not, however, be in the business of propping up industries that for many reasons do not have a sustainable future in Australia.”

According to Hockey, the Coalition would call on the Productivity Commission to investigate this issue.

Hockey said greater productivity would come from “labour market reform to encourage higher pay for better work”.

The news comes after business leaders expressed their concern over Opposition leader Tony Abbott’s promise to increase company tax to fund a paid parental leave scheme.

Peter Anderson, chief executive of the Australian Chamber of Commerce and Industry, has labeled the policy a “mistake”.

Tony Shepherd, of the Business Council of Australia, was more diplomatic, saying the focus for both major parties must be to “improve our productivity and competitiveness”.

“That should be the first port of call in assessing government policies,” Shepherd told The Sydney Morning Herald.

Abbott has argued his policy is a productivity measure, but it remains unpopular with many of his colleagues because of its generosity and the way it is funded.

Forecast to cost $3.3 billion a year, the scheme will be funded by a 1.5% increase in company tax for the nation’s largest 3,200 firms as well as a $100 million top-up from the budget.

Mothers who took leave would receive their full wage for six months. It would be capped at annual salaries of $150,000, meaning a maximum payout of $75,000 for six months.