Australia faces more than decade of uninterrupted deficits according to an updated assessment by the independent Parliamentary Budget Office that shows Senate intransigence will carve a $100 billion black hole out of revenue between now and 2025-26.
Savings not realised as a result of parliamentary gridlock suggest the budget prediction of a near fiscal balance by 2018-19 is overly optimistic because it is based on budget repair initiatives that have not been legislated and, in many cases, are unlikely to ever pass the Parliament.
The PBO's assessment lists out the proposals such as welfare cuts and major higher education reforms already factored into the current budget projections as savings but which are not yet approved, in a table entitled "unlegislated measures carried forward from the 2014-15 budget".
The finding means Treasurer Joe Hockey's lower-than-expected deficit estimate of $35.1 billion for the coming financial year may already be out of date. Without a legislative breakthrough, and leaving aside other variables such as a further decline in revenue from iron ore, company tax, and personal taxes, that 2015-16 deficit jumps from the $35.1 billion stated just a fortnight ago to $38.3 billion thanks to the cumulative impact of un-passed savings measures over the next 13 months.
And the following year's deficit of $25.8 billion blows out to $30.6 billion, assuming no movement.
Among the items listed by the PBO are changes to the Family Tax Benefit (part B) to remove payments when a child turns six instead of the current cut-off age of 16. That has been steadfastly opposed by the ALP, the Greens, and independents in the Senate, denying the government some $17.2 billion over the decade.
All up, the booked savings from family tax measures come close to $33 billion.
Another $3.5 billion is booked for cessation of the Seniors Supplement for holders of the Commonwealth Seniors Card.
Further adding to the budget pain from unrealised "expense measures" is the prospect that some "revenue measures" may fall short of expectations such as the "reintroduction of fuel excise indexation".
And that is despite a possible breakthrough to secure the permanent return of the indexation after the new Greens leader Richard Di Natale flagged a compromise could be reached with the Abbott government after more than a year of stonewalling.
While the resumption of talks with the Greens on this measure improves its chances of survival – after the government resorted to introducing it temporarily last year by regulation – lower-than-expected inflation means increases in the revenue stream are likely to be more modest than the $22.7 billion forecast over the 10-year period.
But Labor's Chris Bowen was not quibbling with the projection, preferring instead to focus on the negative cost impact on households.
"So much for the Prime Minister's feigned indignation over Labor's modest proposals to reduce super tax concessions for high income earners, as the data shows that Tony Abbott will slug Australian motorists an additional $23 billion over the next 10 years as part of his petrol tax hike," he said.
The PBO assessment states the cumulative shortfall of unlegislated measures if carried forward for the decade would be $100.9 billion.
It says further that the increasing losses as the decade proceeds will take the revenue foregone as a percentage of GDP from its current 0.2 per cent to 0.5 per cent.
The government says responsibility for the black hole should reside with the opposition which it says has blocked accumulated savings measures of $52 billion over the four-year budget period.
"What the PBO report shows is the importance of passing all of our outstanding budget measures as soon as possible" Finance Minister Mathias Cormann said.
"Bill Shorten needs to face up to the legacy he left behind when he lost government and start helping."
Mr Cormann claimed earlier this month that Labor was blocking $17 billion worth of government savings measures, along with another $6.5 billion in savings it had proposed but not enacted while still in office, and another $31 billion "in spending from savings that the government has already banked – including $18 billion in foreign aid".
Mr Bowen described the government's claimed "credible path back to surplus" as "a $100 billion house of cards".
"This comes on top of his decision to include more than $4 billion in Future Fund earnings in the budget bottom line each and every year beyond 2020 making up around half the Treasurer's surpluses by 2025-26," he said.
