Turnbull: Labor Must Dig Deeper To Catch Us
The Age
Wednesday March 12, 2008
THE Labor Government will have to deliver bigger cash surpluses in its first two budgets than it has committed to if it plans to match the Coalition's fiscal discipline, shadow treasurer Malcolm Turnbull says.
Mr Turnbull has set a challenge for Labor to produce a cash surplus of "well above" 2% of gross domestic product in its first budget and at least 3.7% in its second budget.In a speech to be delivered as part of the tax forum of the Committee for Economic Development of Australia in Canberra today, Mr Turnbull tears apart Prime Minister Kevin Rudd's five-point plan to tackle inflation, accusing the Government of "using reckless rhetoric on inflation to score political points" and fuelling inflationary expectations.Treasurer Wayne Swan and Finance Minister Lindsay Tanner have vowed to cut "wasteful spending" in the budget in order to ease inflationary pressures on the economy. Labor's five-point plan includes a promise of "fiscal restraint", with the Government committing to a budget surplus target of at least 1.5% of GDP in 2008-09.But Mr Turnbull said Labor's talk about a razor gang was "cheap". He said because the Australian economy was growing strongly, the actual surplus in 2007-08 would be about 2% of GDP - meaning a fiscal tightening in 2008-09 would have to be well above 2%.When the Howard government won office in 1996, one of its first priorities was to make major spending cuts in its budgets. Mr Turnbull said that in the 1996-97 and 1997-98 budgets, the Coalition tightened government spending by 0.9% and 1.2% of GDP respectively for an overall tightening of 2.1%.Mr Turnbull said he seriously doubted whether Labor would be able to match the Coalition's first two budgets.He said if Labor was to match the Coalition's "fiscal policy rectitude" when it took office, it would need to deliver, not forecast, a surplus of 3.7% of GDP in its second budget in 2009-10.Mr Turnbull also rejected the Government's assertions that there was a "chronic skills shortage". In regards to infrastructure policy, Mr Turnbull said it should not be about "aggregate spending targeted at reducing the economy-wide rate of inflation", but rather efficiency and the net benefits of individual projects.Mr Turnbull also attacked Labor's first home savers account, saying it was a demand-side measure that would drive up inflation by further fuelling house prices. This is despite the Coalition making a similar pledge at the 2007 election.While Mr Turnbull accuses Labor of failing to tackle inflation, he still has not offered an alternative plan.
© 2008 The Age
