Treasurer Scott Morrison has warned it will be a slow path back to a budget surplus, highlighting the need to curb spending.
In his first address to the National Press Club as Treasurer, Mr Morrison emphasised the need for spending cuts and income tax relief after the government ruled out increasing the GST.
He acknowledged that of the $80 billion of savings made by the Coalition, $70 billion had been spent again, adding fixing the budget required “test match patience”.
“There is no quick fix to it, there is no one statement, there is no one budget, there are budgets and budgets and budgets and budgets that are required to fix that problem,” Mr Morrison said.
“We are battling strong headwinds but the good news and the hope is that this country is battling those headwinds, I’d argue, better than any.”
Despite the increasing pressures on the budget going forward, Mr Morrison said current funding commitments to state governments would be met.
Mr Morrison also made the case for income tax cuts, labelling the impact of rising average tax rates “a job killer”.
“If anyone thinks the higher taxes to support higher spending is a pathway to prosperity, you’re dreaming,” he said.
“This government isn’t dreaming. This government is driven by hard realities of what those numbers say.”
‘Modest income earners use negative gearing’
Mr Morrison also spoke further on the decision to take an increase in the GST off the table, as well as pushing for the introduction of the Australian Building and Construction Commission.
The speech came at a time when the tax debate is finely poised, with Coalition backbenchers clamouring to be heard.
Labor has seized the initiative by proposing to abolish negative gearing on existing properties from 2017.
The government has also been contemplating some changes to negative gearing but Coalition backbenchers, who agitated against any increase to the GST, are now pushing firmly against any substantive changes.
Mr Morrison also continued his criticism of Labor’s policy, saying the Opposition did not understand who accessed the current policy and why.
“I have always understood that for the vast majority of Australians who use negative gearing, they are modest income earning Australians,” he said.
“I know the Labor Party doesn’t agree with that and there are probably some in this room who don’t agree with that, but the figures speak for themselves.”