QUOTES FROM ECONOMISTS AND BUSINESS LEADERS ABOUT BUDGET SURPLUS

Economists

“stupidity of the government looking for the surplus while monetary policy is going the other way. Economic growth and employment are slowing and fiscal policy is going in the wrong direction – its just dumb.” - Bernie Fraser, former Secretary of Treasury and Governor of the Reserve Bank Australian Financial Review, 5 December 2012, p 8.

''There is no need to cut spending and raise taxes to get a particular surplus in a particular year. There is just no need for that, it is a political promise…it's very dangerous for the economy”. - Professor Warwick McKibbin, The Age, 6 December 2012

“I doubt that there is a single credible economist who thinks that the government’s promise to return the budget to surplus this financial year is a good idea” - Professor John Quiggin, blog 6 December 2012.

“The impact of missing the surplus by the promised deadline is considered to be a political downside rather than an economic downside” - Australian Business Economists forecasting panel, Australian Financial Review, 7 December 2012

“The spending cuts are making the task of the Reserve Bank to maintain growth more difficult” - Bill Evans, chief economist, Westpac Australian, 7 December 2012.

“in the event of a sharp deterioration in the economic outlook, and hence revenue underperformance, delaying the return to surpluses could be an option, given ’s modest debt-to-GDP ratio. Allowing automatic stabilizers to operate fully could also help relieve pressure on monetary policy.” - International Monetary Fund, Public information notice on Article IV consultation with Australia, 15 November 2012.

“If the economic situation were to deteriorate significantly, the [Australian] authorities should let the automatic stabilisers work and should slow budget consolidation.” - OECD, Economic Outlook, 27 November 2012.

“it’s not a good time to be embarking on a fiscal consolidation” - Matthew Hassan, senior economist, Westpac The Age, 6 December 2012

"I don't think it's imperative that the Government deliver a surplus for 2012-13… it's certainly a dangerous time to be cutting back on government spending and so that's a fairly risky approach." - Shane Oliver, Chief Economist, AMP Interviewed on The Business, ABC TV, 30 March 2012.

"I think cutting the Budget by the size they are talking about is an enormous gamble really." - Professor Bob Gregory, ABC 7.30, 19 April 2012.

"It makes no sense to be having tightening fiscal policy at the same time as we are easing monetary policy." - Professor Stephen King, Core Economics blog, 7 May 2012.

“The two arms of policy are working at cross-purposes at the moment.” - Brian Redican, senior economist, Macquarie Group Australian, 7 December 2012.

”The commonwealth's fiscal rules point in the right direction towards the need to balance the budget over time and to rebuild surpluses in case we need to dip in to it. The question is the pace at which it gets done…the slower the nominal economy grows, the slower should be the return to surplus” - Chris Richardson, director, Deloitte Access Economics, Australian, 7 December 2012.

“We have conditioned the electorate to think that a government with a budget $1 in surplus are geniuses, and $1 in deficit and they’re dunces. That’s just not right. I don’t think today’s cuts will be particularly dangerous for the economy, but it is taking money out of an economy that is feeling fragile.” - Chris Richardson, director, Deloitte Access Economics, Australian Financial Review, October 2012.

"Wayne Swan's determination to deliver a budget surplus, regardless of the state of the economy, is seriously reckless." - Tim Coleblatch, Economics editor, The Age, 30 March 2012.

"From a macroeconomic perspective, returning the budget to surplus quickly doesn't make that much sense and could prove a self-inflicted wound to Australia's economic performance." - Christian Carrillo, Head of Asia-Pacific interest rate strategy, Societe Generale, Australian Financial Review, 3 April 2012.

"I think it's now almost a political imperative that they deliver that [surplus]. That's been the result of 15 years or more of political and economic rhetoric. The actual circumstances right today, I think it's hard to argue that a surplus is the main requirement'. - Garry Weaven, Chair, Industry Super Network, ABC News online, 18 April 2012.

"I don't think you can mount an economic case saying it is imperative we have a surplus next year…money should be spent on improving productivity in sectors under stress". - Alan Oster, chief economist, Australian Financial Review, 12 April 2012, p 15.

"in most examples in the historical record, fiscal consolidation has been contractionary for the economy for the first few years…the optimal fiscal response is surely contingent on economic outcomes." - Dr David Gruen, Executive Director, Treasury Comments at Reserve Bank 2011 Annual Conference.

"That return to surplus doesn't change that calculation on the sovereign risk at all…Most of this is a political play." - Bree Neff, HIS Global insight Australia economist, Australian Financial Review, 10 May 2012, p 21.

Journalists’ reporting of economists’ views “…a fiscal exercise driven by the imperative of preserving its political credibility rather than by economic necessity. Many economists could live with a deficit in these uncertain times but politicians no longer can.” - Michelle Grattan, The Age, 23 October 2012.

“Labor pledged to deliver a surplus, and the Liberals have used their rhetoric to make it the test of Labor's ability to manage the economy. Few economists agree…[It is] not a sensible environment in which to take $44 billion or 3.1 per cent of GDP out of the economy.” - Tim Colebatch, The Age, 23 October 2012.

“For economists and business, who winced at the thought of tightening fiscal policy when falling commodity prices and the terms of trade are weakening the economy,,,” - Alan Mitchell, Australian Financial Review, 23 October 2012, p 6.

“a sensible government might have come out by now and carefully explained that as the global economic outlook worsens it will take extra steps to stimulate the economy. If that means running a small but manageable deficit, we can cope.” - James Thomson, Crikey, 3 December 2012.

"And nobody has any confidence that the Government is budgeting for a surplus for good economic reasons, as opposed to political ones." - Alan Kohler, The Drum, ABC website, 13 June 2012.

Business leaders “Our members are telling us that the economy could well be softer than Treasury has projected, and in these circumstances it would be reasonable to revisit the need to return to surplus in 2012-13.” - Jennifer Westacott, Chief Executive, Business Council of Australia, The Age, 31 October 2012.

"…we must now be getting close to the point where it could be self-defeating and fiscal policy could excessively slow the economy and, ironically, impede the recovery of tax revenues." - Innes Willox, Chief Executive, Australian Industry Group. The Age, 31 October 2012.

"Almost 60 per cent of directors surveyed for the April 2012 Director Sentiment Index, released today by the Australian Institute of Company Directors, say that it is not vital for the Federal Government to achieve a surplus." Australian Institute of Company Directors, media release, 3 April 2012.

"Good repair does not mean a surplus for a surplus sake if conditions don’t permit…" - Peter Anderson, Chief Executive, Australian Chamber of Commerce and Industry 2012 Budget submission.

"The biggest potential problem for the Australian economy is the almost mindless commitment to providing a surplus next year." - Ralph Norris, former CEO of , Australian Financial Review, 18 April 2012, p 11.

“This obsession by the federal government with trying to get a surplus in the current environment I think is misguided.” - Martin Monro, chief executive, Watpac construction, Australian Financial Review, 6 December 2012, p 12.

Former Liberal leaders "it was a political necessity, not an economic necessity to deliver a budget surplus" - John Howard, Australian Financial Review, 10 May 2012, p 10.

"the economic case for a budget surplus, one that takes some $40 billion, or about 3-4 per cent of GDP, out of the economy, is weak, indeed." - John Hewson, The Drum, ABC website, 10 May 2012