BUDGET – AUSTRALIA

Economy on track for soft landing: Chalmers

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Original article by Patrick Commins, Geoff Chambers
The Australian – Page: 4 : 12-Jun-24

Treasurer Jim Chalmers will use a speech on Wednesday to defend the federal government’s high-spending 14 May budget. He will contend that it would be irresponsible for the government to cut its expenditure too deeply in the current environment of flat economic growth and high interest rates. He will also state that Labor’s "more balanced approach" will bring inflation under control without "crunching the economy". Chalmers will in turn state that the government is "cautiously confident" that the economy will experience a ‘soft landing’.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

Albanese vows to get the job done before calling an election

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Original article by Joe Hildebrand
The Daily Telegraph – Page: Online : 22-May-24

Prime Minister Anthony Albanese has marked the second anniversary of his government by ruling out an early election, stating that Labor will not to go to the polls until it has addressed the cost-of-living crisis. He adds that reducing the inflation rate is his government’s top priority, and Labor will not focus on its re-election campaign until 2025. Albanese has also noted that handing down a budget amid the current economic conditions is challenging, with the need to balance providing cost-of-living relief with the focus on combating inflation.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

Taxman’s take about to hit an 18-year high

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Original article by Patrick Commins
The Australian – Page: 2 : 15-May-24

The 2024 budget papers have revealed that total tax receipts as a share of GDP will increase from 23.5 per cent in 2022-23 to 23.8 per cent in 2023-24, making it the highest share since 2005-06. The impact of the stage three tax cuts will then see total taxation receipts as a share of GDP decline to 23.3 per cent in 2024-25. Australians will pay $299.4 billion in income tax in 2023-24, with that figure falling to $293.7 billion in 2024-25 as a result of the tax cuts taking effect.

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Warning on jobs rate if productivity stalls

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Original article by Ewin Hannan
The Australian – Page: 4 : 15-May-24

The 2024 budget papers indicate that productivity has grown for two consecutive quarters, and that it is expected to continue to pick up if economic conditions improve. However, Treasury has warned that if productivity does not improve as expected, it could lead to a rise in unemployment. Meanwhile, the budget papers have forecast that annual wages growth will decline from 4 per cent to 3.25 per cent over the next two financial years before rising to 3.5 per cent in the subsequent years of the forward estimates, while lower forecast inflation will result in real wages growth of 0.5 per cent each year over the forward estimates.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

Purge of consultants heralds public service jobs boom

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Original article by David Ross
The Australian – Page: 11 : 15-May-24

The number of federal public servants has increased from 173,142 to more than 197,000 since Labor took office in May 2022. The budget papers show that the number of public servants is forecast to rise by 12,042 over the next year, while this is on track to be 36,000 higher than in 2021-22. The growth in public service numbers is at least partly due to the government’s push to reduce the cost of using external consultants, with thousands of these roles to be converted into in-house positions.

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AUSTRALIAN LABOR PARTY

Miners hail $17.6b in tax credits – but BHP nickel still on death row

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Original article by Brad Thompson
The Australian Financial Review – Page: Online : 15-May-24

Australia’s critical minerals industry has welcomed the federal government’s decision to provide the sector with a 10 per cent production tax credit. However, the budget measure may not ensure the future of BHP’s nickel operations in Western Australia, given that the tax credit will not be availabe until 2027. The potential closure of BHP’s nickel mines, refinery and smelter would result in the loss of about 3,000 jobs; BHP has previously warned that tax credits may not be enough to save the Nickel West business, which is contending with a glut of low-cost nickel produced in Indonesia with Chinese backing.

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BHP GROUP LIMITED – ASX BHP, NICKEL WEST

Labor splashes billions on cost of living relief

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Original article by Geoff Chambers
The Australian – Page: 1 & 4 : 15-May-24

The 2024 budget papers show that the federal government expects to post a surplus of $9.3bn for 2023-24. However, there will be a combined budget deficit of $122bn over the forward estimates period. Meanwhile, the budget features $7.8bn of new spending on cost-of-living relief, headlined by a $3.5bn energy rebate; this will provide every household with a $300 credit on their electricity bill, to be paid in four quarterly instalments. Treasurer Jim Chalmers says the cost-of-living measures will reduce the inflation rate by 0.75 of a percentage point in 2024 and 0.5 per cent in 2025. The Treasury expects inflation to fall to 3.5 per cent by June and 2.75 per cent by mid-2025.

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AUSTRALIA. DEPT OF THE TREASURY

Cost-of-living handouts that bust inflation a trick

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Original article by Patrick Commins, Joe Kelly
The Australian – Page: 1 & 4 : 14-May-24

The federal government has confirmed that the 2024 budget will feature measures to combat inflation and the cost-of-living crisis, including electricity bill rebates and rental assistance. However, former Reserve Bank of Australia board member Warwick McKibbin contends that using government subsidies to combat inflation is a "political trick" that will not address underlying price pressures in the economy. McKibbin has also questioned the Treasury’s forecast that inflation will return to the RBA’s target range of 2-3 per cent by the end of 2024. He adds that the Treasury and the RBA have underestimated the inflationary impact of the revised stage-three personal income tax cuts that take effect on 1 July.

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AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA

Rate rise still priced in despite Chalmers’ forecast

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Original article by Alex Gluyas
The Australian Financial Review – Page: 28 : 14-May-24

AMP’s chief economist Shane Oliver is amongst those who have questioned the federal government’s forecast that the headline inflation rate will fall to 3.5 per cent by the end of June. He notes that it is uncertain as to how cost-of-living relief in the budget will impact on inflation, given that the financial year ends in about six weeks. Paul Bloxham of HSBC in turn says the budget is likely to boost the Reserve Bank’s preferred measure of core inflation, which is likely to rule out an interest rate cut in 2024. Meanwhile, futures traders still expect the central bank to increase the cash rate this year.

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AMP LIMITED – ASX AMP, HSBC HOLDINGS PLC, RESERVE BANK OF AUSTRALIA

Surplus of $9.3b, then a sea of red ink

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Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 4 : 14-May-24

The federal government is set to announce a budget surplus of $9.3bn for 2023-24, having previously forecast a deficit of $1.1bn in the mid-year economic and fiscal outlook in December. It will be only the second successive budget surplus since the global financial crisis; however, this will be followed by large deficits over the forward estimates period, which the government has attributed to "unavoidable spending". Meanwhile, Prime Minister Anthony Albanese says it will be "a Labor budget through and through", with cost-of-living relief that will reduce rather than increase inflation and a tax cut for every worker.

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AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET