Dutton’s doomsday debt and deficit warning 

Peter Dutton will deliver his budget reply speech on Thursday at 7.30pm. 

For anyone who won’t be glued to their television, Crikey has attempted to predict what the opposition leader might say, based on comments from him and his Coalition colleagues over the past few days.

The big picture

The Coalition reckons Treasurer Jim Chalmers’ budget is “full of doom and gloom”, engaging in “commentary and forecasting”, but presenting “no plan” for how to improve the economy. 

Opposition treasury spokesman Angus Taylor told Sky News Australia on Wednesday the budget was a “vanity project” given the Coalition presented its own budget as recently as March, and asked the rhetorical question “what’s the point?”

Dutton has tried to get the moniker “Grim Jim” to stick. And he’s spruiked the Coalition’s record of balancing the budget in 2019, before the coronavirus pandemic turned everything on its head. 

The Coalition has said it inherited a mammoth deficit from Labor in 2013, which it chipped away at over time. In that sense, Dutton’s and Chalmers’ messages are not so unlike each other — the treasurer repeatedly pointed to the national debt left by the Coalition in his budget speech on Tuesday. 

Broken electricity price promise

Labor said during the campaign that if it formed government, it would “cut power bills for families and businesses by $275 a year for homes by 2025”.

But Tuesday’s budget indicated that power bills would likely rise by 20% in the second half of this year, and a further 30% in 2023-24.

Dutton has repeatedly hammered the government over that discrepancy and is likely to bring it up during his budget reply. 

He has repeatedly dubbed it a “broken promise” and said Russia’s war on Ukraine is not an excuse, because the war started before the May election.

In recent media interviews, Dutton has said Labor mentioned the $275 price reduction goal no less than 97 times during the campaign. 

He’s also brought up a projected 40% increase in gas prices which he says will heap more pressure on family budgets. 

So what would the Coalition have done differently? 

Dutton has said the solution to the gas price problem would be to bring more of the product online. That way the supply could be increased to “meet international commitments”, plus “provide support domestically”. 

Taylor called it “Economics 101” in a recent interview with Bloomberg. 

“When you want to get prices down, supplying the market with gas is to get more supply into the domestic network,” Taylor said. “We’re a big exporter. The Americans do it very successfully. And we can do this and in fact, we did it when we’re in government. 

“A sharp reduction in gas prices, and a separation of the domestic price from the international price by getting more gas in that domestic network. It’s a straightforward formula and it works.”

Cost of living

A common Coalition talking point in recent days has been a calculation it says shows the typical family will be $2000 worse off by Christmas. 

Asked on ABC radio how that calculation was done, Dutton replied: “Well, you can look at the impact of mortgage increases.”

He added that “the government’s assumptions over the budget papers, which we’ve examined, all of the cost increases that we’ve mentioned already in terms of electricity and gas, the assumptions that they’ve got about the cash rate and the impact on cost of living. It’s all there in the budget papers.”

Dutton has claimed a lot of families would have felt “deceived” by Tuesday’s budget because it didn’t deliver enough strategies to tackle the cost of living. He’s said there’s “shock across the Australian community” because of that. 

However, the Coalition won’t commit to an electricity subsidy. That’s not needed, Taylor has said, “if you get your policies right”. Plus, it would cost taxpayers too much money, he believes. 

On the other hand, Dutton has brought up the fuel excise cut his colleagues brought in while in government as an example of a tangible and temporary measure to put downward pressure on the cost of living. 

Debt and deficit 

Dutton and Taylor have both pointed out that Tuesday’s budget forecasts the deficit to worsen over the next three years.

With that in mind, they’ve said it isn’t responsible to spend $115 billion out of a $142 billion tax windfall.

Dutton is likely to take credit for setting up Australia’s economy in a way that makes it possible to avoid the looming recession threatening other countires. 

Labor inherited “very strong” fundamentals, Dutton has said, but will waste it away with “huge tax and spend” like they “always” do. 

Taylor told Bloomberg the budget failed to “consolidate” the strong position the Coalition left behind. 

That’s disappointing, Taylor said, and could have been done with a “very simple formula”.

“Make sure you’ve got strong economic growth and it’s stronger than spending growth,” he said. “We did it. That’s exactly what we did when we inherited that $50 billion deficit in 2013. We got it back to balance by 2019. That put us in a position when we went into the pandemic, which was so much stronger than around the world. And we’ve benefited from that. Now, the job of this government is actually to strengthen the position, not weaken it.”