The Turnbull government won't be locked into an "artificial deadline" for returning the budget to surplus, Finance Minister Mathias Cormann said, ruling out stimulus spending to boost the economy.
Figures released last week showed the economy shrunk by 0.5 per cent last quarter, the biggest drop since the global financial crisis.
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Economy goes backward
GDP contracted 0.5 per cent in the September quarter. The Treasurer points the finger at weak business investment.
Senator Cormann, speaking ahead of the mid-year budget review on December 19, said he was not expecting fourth quarter results to follow suit. Two consecutive negative growth results signify a technical recession.
Since the surprising result, both the government and the opposition have shied away from painting the economy in such a negative light, but Labor has used the figures to attack the Coalition's "economic mismanagement".
But Senator Cormann said the government remained on track for a return to budget surplus.
"The government is doing as we said consistently, for some time, we are getting the budget back to surplus as soon as possible, we are not locking ourselves into an artificial deadline – we are obviously mindful of the fact that we need to make decisions that are both fiscally and economically responsible," he told Sky News.
"Based on the numbers in the budget, the return to surplus is forecast, it is projected for 2020/21."
He said the government had shaved $250 billion, in net terms, off the budget's bottom line since coming to power in 2013 and was focussed on ensuring "that we don't go backwards as a result of the policy decisions that we are making".
!["We don't believe it is sensible to pursue so called stimulus spending," says Finance Minister Mathias Cormann.](/web/20161212023447im_/http://www.brisbanetimes.com.au/content/dam/images/g/o/n/1/v/k/image.related.articleLeadwide.620x349.gt8ioq.png/1481453315555.jpg)
But he said stimulus spending would not form part of that policy.
"We don't believe it is sensible to pursue so called stimulus spending," he said.
"Labor pursued that sort of approach when they were in government and it clearly caused damage to the Australian economy, particularly making the non-mining sectors in the economy less competitive internationally than they otherwise would have been, making it harder for our economy to properly transition in the period post GFC."
But Shadow Finance Minister Jim Chalmers said the government's "economic mismanagement was putting our hard-won AAA credit rating at risk".
"The projected deficit for this financial year has tripled, while the deficit for 2015-16 was a whopping eight times higher than projected the day the Coalition took office," he said.
"…Malcolm Turnbull and his economic team will have no one to blame but themselves if they lose the AAA, which will push up mortgage repayments and smash business and consumer confidence."
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