A tense Senate Estimates hearing has put Treasury under scrutiny over a reported $57 billion deterioration in Australia’s budget bottom line between PEFO and MYEFO. Senator James Paterson challenged the Treasury Secretary over how the deterioration should be measured, arguing that Australians need to see the scale in actual dollar terms rather than simply as a share of GDP. The hearing also focused on what is driving the deterioration, with Paterson seeking to establish how much comes from government policy decisions versus changes in economic forecasts and parameters. The Secretary said Treasury’s current methodology does not provide that split for medium-term projections. Paterson also questioned whether a 1.8% of GDP increase in government spending and a 1.9% turnaround in the budget balance could be adding inflationary pressure while the economy is already operating around its “speed limit”. Transparency over large and “lumpy” spending decisions was another major point of contention.

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