100 days in, Abbott’s about face on budget surplus stirs up industry groups

The Coalition looks set to abandon its target to return the federal budget to surplus within four years, as it hits 100 days in power.

Tomorrow, the federal government will release its Mid-Year Economic and Fiscal Outlook, ahead of which Prime Minister Tony Abbott has suggested to media that achieving budget surplus by 2017 will be unrealistic.

Despite pre-election talk of returning the budget to surplus, Abbott appeared to back-pedal on timeframes, as reported in The Australian Financial Review.

“We said we would return the budget back to surplus at least as quickly as Labor had proposed. What we are discovering the more we dive deeply into the budget is the extent of Labor’s fiscal disaster,” he said.

The forecast deficit could hit more than $40 billion, The Age reported.

He told radio that tomorrow’s fiscal outlook would reflect the management of the previous Labor budget.

“Next year’s budget will put us back on a path [towards] a sustainable surplus,” Abbott said.

”We are purposefully, carefully and methodically putting in place policies to help families by reducing their cost-of-living pressures, improving job security, encouraging small business and delivering better services,” Abbott said, as reported in The Age.

Council of Small Business of Australia chief executive Peter Strong told SmartCompany he was not concerned about a surplus delay as it was the “sensible and proper thing to do”.

“Internationally we don’t have the same debt as other countries, and we dealt well with the GFC, so we don’t want to achieve a surplus for the sake of it,” he says.

“It is important to keep the balance and to keep up the standard of government services.”

Strong was more disappointed about cuts to the loss carry-back tax and the instant asset tax write off, which he says will have a greater impact on small business. 

He says the government should find alternative ways to fill the financial hole, such as taxing digital purchases online including music and eBooks, and ensuring that major businesses do not dodge taxes.

A spokesperson for the Business Council of Australia said they would not speculate on tomorrow’s findings, but would comment after the official release.