News National Budget not that draconian, says RBA chief

Budget not that draconian, says RBA chief

Twitter Facebook Reddit Pinterest Email

Reserve Bank governor Glenn Stevens reckons Australians should be having a discussion about how the very big and costly “good things” they want the government to provide are funded.

The Abbott government is struggling to win parliamentary support for its first budget which the Reserve Bank says contains prudent measures needed to avoid a future catastrophe.

“It’s in the medium term where we as a community have decided we want to do some very big and very costly and very good things in the public space but we haven’t actually taken the decisions to secure the funding for those things,” Mr Stevens said in the second of his twice-yearly appearances before the House of Representatives economics committee on Wednesday.

“That’s not catastrophic today, but it is going to be a medium-term issue if we don’t address it.”

But a “prudent and sensible” strategy that recognised that imperative was needed now.

And in a reference to the way the budget had been received, Mr Stevens said he didn’t think it was that draconian.

The governor’s comments coincided with another day of mixed messaging from the government.

Finance Minister Mathias Cormann said the government always knew getting budget measures through the parliament would take some time.

“This was always going to be a marathon rather than a sprint,” he said, citing the planned $7 GP co-payment which is not scheduled to start until July 2015.

Treasury figures suggest there is no crisis around implementing remaining measures because two-thirds of policy decisions are already in place.

But Treasurer Joe Hockey believes the quicker action is taken to fix the structural challenges inherited from Labor, the less severe the response will have to be.

The government is locked in negotiations with doctors and Senate crossbenchers with the amount and scope of the GP co-payment a major sticking point.

Prime Minister Tony Abbott refused to say how the talks were going, but is confident parliament will eventually pass a “modest” co-payment.

However, he has given a strong signal his government won’t entirely exempt pensioners as proposed by doctors.

Mr Abbott’s argument is that pensioners are not entirely exempt from making a co-payment on taxpayer-subsidised medicines.

“Why should they be exempted from the Medicare co-payment?” he said.

Shadow treasurer Chris Bowen described the government’s rhetoric as “incoherent, illogical and inconsistent”.

“The government can’t even get simple messaging straight,” he said.