Labor unveils 10-year economic strategy; Economists fear Shorten will risk Australia’s credit rating

The Australian Labor Party has unveiled its 10-year economic plan for the country. Opposition Leader Bill Shorten promises to “put people first” in the party’s plan for a “stronger, fairer economy,” but economists fear the Opposition will worsen budget deficit with the strategy.

On Wednesday, the Labor party presented six key priorities that it claimed will support economic transition while driving productivity and living standards into the future. These six key priorities are:

Invest in people
Building Australia
Driving investment in renewables and new industry
Supporting innovation and startups
Helping small business
Budget repair that’s fair

The plan opposes the Turnbull government’s $48 billion corporate tax cuts, with Shorten vowing that the Labor party would not be a “big spending government” if it’s elected.

“When middle and working class families prosper, when small businesses prosper, Australia prospers,” Shorten said, adding the Prime Minister Malcolm Turnbull’s tax cut for big businesses is not the solution.

“Labor does not accept that cutting penalty rates for low paid workers and giving tax cuts to big businesses is the answer – this will only take us backwards.”

Shadow Treasurer Chris Bowen admitted to the ABC radio that Labor’s 10-year economic strategy will create larger deficits than the current government over the next four years. However, he said the country will return to surplus in the same year, 2020-21.

“Both the government and the opposition will have deficits over the forward estimates, that is true, and it is true that we won’t have the same degree of fiscal contraction over the four years, but we’ll get back to budget balance in the same year,” Bowen said.

Labor risks Australia’s AAA credit rating

Economists are concerned with the Labor’s strategy, though, saying Shorten will risk Australia’s AAA credit rating.

Independent economist Saul Eslake told the Sydney Morning Herald that Labor is potentially risking the AAA credit with bigger deficits.

He said that, “given Mr Bowen has expressed concern, rightly, that Australia is at risk of losing its AAA rating, it hardly seems sensible for a would-be Labor government to tolerate a significantly greater budget deficit over the next four years.”

Grattan Institute’s John Daley agreed. “They [ratings agencies] are very nervous about a pattern of behaviour that puts off tough decisions again and again. And meanwhile, the debt gets larger and larger,” Daley said.

Stephen Anthony of Industry Super said that whoever wins next month’s election would have its four-year outlook scrutinised.