Lenore Taylorand Gabrielle Chan

theguardian.com, Thursday 14 November 2013

Treasurer ramps up the rhetoric as Labor and Greens refuse to back $200m rise in deficit cap

Fighting talk: Treasurer Joe Hockey speaks during Question Time Photograph: Lukas Coch/AAP

Treasurer Joe Hockey has threatened “massive cuts” to government expenditure if Labor and the Greens block the government’s bid to raise Australia’s debt limit to $500bn.

Labor and the Greens combined in the Senate on Wednesday to amend the government's bill to provide for a $400bn debt ceiling – a $100bn increase on the current level, but not the $500bn the government had sought. The amended bill will now be returned to the House of Representatives.

Speaking on ABC radio, Hockey said Labor was “playing games” and this could force the new government to take drastic action.

“We’ve inherited this mess ... there is no choice, if Labor prevents an increase to the debt limit, there is no choice to having massive cuts to government expenditure,” he said.

“If they want to own the cuts to the budget they will own them,” Hockey said.

“I will not put in place a budget that has a bigger debt than the debt limit and therefore the Greens and Labor will be responsible for the very significant cuts that will need to be made.”

Hockey has also warned that Labor could be responsible for a US-style government shutdown if it persists with its stance on the debt ceiling, and accused Labor of “playing games” because at the same time as it was opposing the increase in the debt limit it was also opposing proposed savings the government had already announced.

Shadow treasurer Chris Bowen accused Hockey of “confecting” a crisis.

“This is a political stunt of the treasurer’s own making … There is no crisis. If the treasurer is mature enough and sensible enough to work with the parliament he can get an increase to $400bn today ... nobody wants to see a stand-off and a crisis like they had in the US and we wouldn’t let that happen, but the government has some responsibility here.

“Mr Hockey can confect a crisis for political purposes if he wishes to but it is not the responsible thing for the treasurer of Australia to do.”

As well as ramping up the rhetoric, the government is also seeking to persuade Labor of the need to raise the ceiling.

Tony Abbott said he had offered the opposition leader, Bill Shorten, a private briefing from the Treasury secretary, Martin Parkinson, on the state of the budget in order to win Labor support to increase the debt cap.

The prime minister said that while he was prepared to organise the extraordinary Treasury briefing, he was not prepared to release the government’s independent advice for the public or parliament to justify the rise.

“What I am offering is a full and frank briefing for the opposition by the treasury secretary Parkinson and other officials,” he told the ABC’s 7.30 program on Wednesday night.

“This is Labor’s debt and we have always been critical of Labor’s addiction to debt and deficit. We want to rule a line under this. We don’t ever want to go near the Parliament asking for the debt ceiling to be dealt with again.”

But Bowen said on Thursday that Labor did not want a confidential briefing, it wanted the government to give a full explanation to the Australian people.

The government introduced the bill to increase the debt cap by $200bn after Question Time on Wednesday. But Labor is attempting to amend the increase to only $100bn, on the grounds that the Coalition has not justified such a large increase.

During Question Time, Labor challenged statements by Tony Abbott that he had never opposed attempts by Labor to increase the debt cap.

“While we always opposed it, we never voted against it,” Abbott told the parliament.

On 7.30, Abbott argued that under Labor’s pre-election fiscal outlook, the gross debt was forecast to reach $370bn. Abbott used former treasurer Wayne Swan’s justification of a buffer within the debt cap of between $40 to $60bn “for safety against contingencies”.

But opposition treasury spokesman Chris Bowen challenged the Government to release Treasury advice which justifies the $200bn rise or return to the parliament at a later date when an increase over $400bn.

“I am prepared to continue sitting tonight so that you can have an increase,” said Bowen.

Labor’s Ed Husic ridiculed the turnaround in the Coalition’s attitude to the debt limit, describing it as similar to a hypnosis show at an RSL club.

“Change your mind when you hear the clap,” he said. “Their message now doesn’t match what they said before.”

The Greens’ Adam Bandt said the government had not put forward “one single argument” to justify the rise.

“This high-handed arrogance will not wash,” said Bandt.

“We are prepared to act on published information to increase the limit but we are not prepared to write a half a trillion dollar cheque.”

Joe Hockey threatens 'massive cuts' if Labor blocks debt increase | World news | theguardian.com