The last federal treasurer to hand down a surplus has given the Turnbull government’s latest budget the nod of approval.
But Peter Costello says it will still probably take a decade of surpluses to pay off the nation’s debt and questions whether the country and its politicians are up for that challenge.
The former Liberal treasurer had issued a grim warning before last week’s budget was handed down, saying many Australians would be dead before the nation pays off its debt.
“The good thing about the budget is it now shows a believable path to balance surplus,” Mr Costello told AAP after delivering a speech in Sydney on Monday.
Treasurer Scott Morrison’s third budget forecast returning to the black a year earlier than previously expected, while putting a seven-year personal income tax cut package at its centre.
Mr Costello backed the plan that will increase the tax threshold and reduce the number of tax rates while capping tax to 23.9 per cent of GDP.
“What we should try and do is get some agreement about capping expenses, and then if our revenue and our expenses are the same then we won’t be running a deficit and we won’t be building up debt,” he told a budget briefing at the Centre for Independent Studies.
His only concern is that the final stage of the tax plan does not occur until 2024, two general elections away and too far away to be sure how the economy will be performing.
“Does somebody want to tell me what iron ore prices will be in 2024 because if you know, tell me, I will go and buy some futures contracts and make an absolute killing?” he joked.
The three-stage tax reductions initially assist low and medium-income earners, but the latter stages aimed at higher income earners have already been opposed by Labor, the Greens and Pauline Hanson’s One Nation.
Labor has said it would support the first stage that will give the average earner a $10 a week tax cut, although Opposition Leader Bill Shorten has promised to double that if he wins government.
Mr Shorten described the rest of Prime Minister Malcolm Turnbull’s plan as a “mirage” and another political hoax from the “charlatans”.
“Mr Turnbull’s offer of giving you something in seven years time – I don’t think that even his people believe it, do they?” he told reporters in Brisbane.
But Mr Morrison has repeatedly rejected the idea of splitting the plan.
“What I find amazing about the Labor Party is they’re happy to commit the Australian taxpayer to spending off into the never-never, but they’re not prepared to actually go into the parliament and vote for tax relief for all Australians into the future,” Mr Morrison told reporters in Brisbane.