BUDGET – AUSTRALIA

Budget warning after RBA shock

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Original article by Michael Read, Phillip Coorey
The Australian Financial Review – Page: 1 & 6 : 3-May-23

Treasurer Jim Chalmers says the Reserve Bank of Australia’s decision to increase the cash rate to 3.85 per cent on Tuesday underlines the fact that inflation remains the primary challenge for the domestic economy. Chalmers adds that the latest rate increase highlights the need to ensure that the budget on 9 May does not add to Australia’s inflation outbreak. Amid calls for an increase in welfare payments, Chalmers has stresssed that the budget will include "responsible cost-of-living relief" that does not add to inflation. Meanwhile, RBA governor Philip Lowe has conceded that further interest rate rises may be needed in coming months in order to reduce inflation to the target range of 2-3 per cent; however, he says the RBA does not need to get inflation back to the target straight away, while it also cannot take too long to do so.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA

Burying a $34bn budget bomb

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Original article by Patrick Commins, Geoff Chambers
The Australian Financial Review – Page: 1 & 4 : 19-Apr-23

The federal government’s Economic Inclusion Advisory Committee has made 37 recommendations in a report that has been released ahead of the budget on 9 May. The Treasury’s modelling suggests that implementing all of the recommendations would cost more than $34bn over the forward estimates period. This includes $24bn for the committee’s proposal to increase the JobSeeker allowance to 90 per cent of the age pension. Treasurer Jim Chalmers has indicated that the government will consider some of the recommendations, but he has downplayed the prospect of a large increase in JobSeeker amid the need for fiscal restraint. However, he says the budget will include measures to address disadvantage.

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AUSTRALIA. DEPT OF THE TREASURY

PM demands budget spending offsets

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Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 4 : 7-Feb-23

The current inflation rate stands at 7.8 per cent, and Treasurer Jim Chalmers told parliament on 6 February that it is "obviously unacceptably high" and will stay higher than the government would like for longer than it would prefer. Prime Minister Anthony Albanese says spending restraint must be the theme of its 10 May budget, particularly as around 20 per cent of all mortgage loans will switch from fixed rates in 2023 to much higher variable rates. It is understood that Albanese has told his ministers not to come up with new spending proposals for the budget unless they are accompanied by offsets

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Future dark under ALP: Dutton

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Original article by Geoff Chambers
The Australian – Page: 1 & 2 : 28-Oct-22

Opposition leader Peter Dutton has used his budget-reply speech to criticise the federal government’s stance on a range of issues, including industrial relations, energy policy, housing and taxation. Dutton described Labor’s push for multi-employer bargaining as a "throwback to the 1980s" that will reduce productivity and result in strike action across the country. Dutton also contended that the government’s first budget will leave the average family about $2,000 worse off by Christmas, given that it will result in a rise in power prices, the cost of living, taxes, interest rates, unemployment and the deficit. Dutton said the government has already broken its election promise to reduce energy bills by $275 within three years, and he claimed that Labor is "laying the groundwork to break" its promise on the stage-three tax cuts. He also backed the Coalition’s proposal to allow people to use superannuation savings to buy their first home, contending that Labor’s budget plan to encourage super funds and other institutional investors to fund one million new homes is unrealistic.

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LIBERAL PARTY OF AUSTRALIA, AUSTRALIAN LABOR PARTY

Shorten: NDIS blows out to $50b

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Original article by Phillip Coorey, Michael Read
The Australian Financial Review – Page: 1 & 6 : 19-Oct-22

The federal government will bring forward a review of the National Disability Insurance Scheme, amid growing concern about the rising cost of the program. NDIS Minister Bill Shorten says the review will examine its operation, sustainability and responsiveness to participants’ needs. He has conceded that many people who use the NDIS do not have "complex needs". Shorten has revealed that the government’s first Budget on 25 October would show that the projected cost of the NDIS will rise by $8.8bn over the next four years, to $50bn a year. The former Coalition government had estimated that it would cost $44.6bn annually by 2025-26.

CORPORATES
AUSTRALIA. DEPT OF SOCIAL SERVICES

Floods hit cost of living: Chalmers

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Original article by Phillip Coorey
The Australian Financial Review – Page: 5 : 18-Oct-22

The office of Treasurer Jim Chalmers has indicated that it is too soon to estimate the inflationary and budgetary impact of the floods in Victoria and NSW. However, Chalmers has conceded that the floods will increase the cost of living and may boost the inflation rate, given that some of the east coast’s major food production regions have been affected. He adds that the forecast Budget deficit for the current financial year is also likely to increase. Meanwhile, the Victorian government has announced a $351m flood recovery package. There are fears that the town of Echuca is facing a second flood peak, while Kerang is expected to be isolated by floodwaters for up to two weeks. Heavy rainfall that is forecast for later in the week also looms as a new threat for flood-affected towns.

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AUSTRALIA. DEPT OF THE TREASURY

Chalmers warns of rates-driven inflation

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Original article by Ronald Mizen, Matthew Cranston
The Australian Financial Review – Page: 4 : 12-Oct-22

Treasurer Jim Chalmers says the world is facing a "substantial" global economic downturn, although he adds that the federal government’s first Budget on 25 October will not forecast a recession in Australia. Chalmers has also warned that the widening gap between interest rates in Australia and the US could boost inflation by putting downward pressure on the Australian dollar and making imports more expensive. Meanwhile, the International Monetary Fund now expects the Australian economy to grow by just 1.9 per cent in 2023; it had previously forecast growth of 2.2 per cent. The IMF has also downgraded its global growth forecast.

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AUSTRALIA. DEPT OF THE TREASURY, INTERNATIONAL MONETARY FUND

Treasurer tipped for $114b revenue windfall

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Original article by Tom McIlroy, Ronald Mizen
The Australian Financial Review – Page: 4 : 12-Oct-22

Deloitte Access Economics has forecast that the federal government’s Budget on 25 October will include additional revenue of $114.4bn over four years. Deloitte also anticipates that government spending will be higher than expected, and the firm has forecast that cumulative underlying cash deficits will be $45.5bn lower over four years. Stephen Smith of Deloitte says the strength of the domestic economy is a key reason why Australia has emerged from the pandemic with a budget position that is far healthier than most of its peers.

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DELOITTE ACCESS ECONOMICS PTY LTD

ALP’s deficit warning despite $50bn boost

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Original article by Patrick Commins
The Australian – Page: 1 & 2 : 21-Sep-22

Treasurer Jim Chalmers has advised that the Budget deficit for 2021-22 is now likely to be around $30bn, compared with expectations of about $79.8bn just four months ago. Government revenue has been $28bn higher than forecast due to factors such as rising commodity prices. Government payments are in turn $20bn lower than expected, with a record low official unemployment rate resulting in a sharp fall in welfare payments. However, Chalmers says the improvement in the Budget bottom line has been largely driven by temporary factors, and he notes that the prices of key commodities have fallen since the start of the financial year. Chalmers is expecting a bigger deficit for 2022-23.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

Nation ‘needs to expect bad news’: Chalmers

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 26-May-22

The Coalition’s pre-election economic and fiscal outlook had forecast a Budget deficit of $80bn in 2021-22 and $78bn in the following financial year, before falling to $43bn by 2025-26. However, Treasurer Jim Chalmers has warned that Labor’s first Budget in October will reveal that the nation’s finances are in a much worse state than the pre-election update had indicated. Chalmers says inflation, rising interest rates and falling real wages are the "defining challenges" for the Australian economy. Finance Minister Katy Gallagher has emphasised the need for strong fiscal discipline.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF FINANCE, AUSTRALIAN LABOR PARTY