Hockey defends his economic forecasts

Treasurer Joe Hockey has rejected suggestions he padded economic forecasts to paint a bleak picture of the federal budget and bolster his case for tough spending cuts.


Growth forecasts for the next two years are well below the long-run average and at the lower end of economists predictions.

Unemployment expectations are for a 6 per cent jobless rate by the middle of 2014 and just above that for the forseeable future.

Labor has accused the treasurer of softening up voters for “deep and brutal” cuts in the May budget.

“Not at all, not at all ,” Mr Hockey told ABC radio on Wednesday, a day after releasing the mid-year economic and fiscal outlook.

You could not have forecasts that dropped the unemployment rate from 6.25 per cent to 5 per cent in one year with 3 per cent growth, he said.

“It’s just nonsensical in that sort of circumstance.”

Mr Hockey said Labor had massaged forecasts for unemployment to unreal levels.

That had allowed the previous government to forecast a return to surplus in 2017/17.

Mr Hockey also rejected calls for new taxes or tax increases to bring the budget under control.

The coalition was not going to do what Labor did and take “a baseball bat to confidence in the economy”, he said.

Instead the government would address the root cause by cutting expenditure.

Shadow treasurer Chris Bowen says Labor pre-election predictions of deep spending cuts had proved to be correct.

“They denied until they were black and blue in the face, and now we see clearly them predicting those cuts,” he told ABC television.