It’s a Budget deficit, not debt: Deloitte

Australia has a deficit problem rather than a debt problem and Governments of all sides have used the Budget deficit to conceal from punters the fact that the prosperity that existed during the resources boom has since deflated.

Deloitte Access Economics Budget Monitor said that because Australia has a deficit problem, downgrading Australia's AAA rating would be a mistake.

"Make no mistake: our deficits aren't the result of big investments in the future — they're the result of pretending to the punters that the boom is rolling on," the paper said.

"At some stage politicians of all sides need to be more honest about the need for spending cuts and tax increases. Despite this being an election year — or even better, because of it — that time should be now."

The longer-term Budget outlook is will be shaped by a range of existing programs becoming more expensive such as the National Disability Insurance Scheme, child care and paid parental leave, hospital and school funding, carer support, aged care, disability pensions, age pensions and Defence.

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"That means much of the Budget is already promised to grow fast, with the bulk of that pain falling just beyond the current forward estimates," the paper said.

It also pointed out the Senate is still refusing to adopt the savings options in front of it, and the ageing population and growing health costs will dent the Budget.