BUDGET DEFICITS – AUSTRALIA

Treasurer concedes coronavirus economic figures sobering as Australia faces largest deficit in history

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Original article by Brett Worthington
abc.net.au – Page: Online : 13-May-20

Treasurer Josh Frydenberg used an economic update on 12 May to advise of a blowout in the budget deficit. He revealed that the underlying cash deficit was $22.4bn at the end of March; this is nearly $10bn higher than the federal government had forecast in its mid-year Budget update in December. Frydenberg has not revealed the likely size of the deficit for 2019-20, but Chris Richardson of Deloitte Access Economics expects the next two budgets to feature the biggest deficits on record. Treasury expects GDP to fall by at least 10 per cent in the June quarter due the coronavirus pandemic, while household consumption is forecast to fall by about 16 per cent.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

Brace for a record fall in GDP

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Original article by Patrick Commins
The Australian – Page: 4 : 25-Mar-20

JPMorgan economist Ben Jarman expects GDP to fall by 10 per cent in the June quarter due to the coronavirus lockdown measures. The previous largest quarterly decline in GDP was just two per cent in 1974. Jarman also forecasts that the unemployment rate will rise to 11 per cent during the quarter, a view shared by Bill Evans of Westpac. However, Evans expects GDP to fall by just 3.5 per cent in the quarter. Westpac economists have also forecast a Budget deficit of $90bn in 2019-20 due to the federal government’s stimulus measures, and a deficit of $160bn in 2020-21.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC

Labor will stick to top tax rate of 49pc

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Original article by Phillip Coorey
The Australian Financial Review – Page: 6 : 17-May-18

Shadow treasurer Chris Bowen has used a National Press Club speech to reiterate that a Labor government would reinstate the temporary budget repair levy. Bowen argued that the two per cent levy on incomes of more than $A180,000 is justified as the Budget is still in deficit. He added that Labor would retain the levy until the Budget is sustainably in surplus, and nominated one per cent of GDP as a likely figure. Bowen also gave indications that Labor will support the second stage of the May 2018 Budget’s income tax package.

CORPORATES
AUSTRALIAN LABOR PARTY, NATIONAL PRESS CLUB (AUSTRALIA)

Stronger economy to cut size of deficit

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Original article by David Uren, Joe Kelly, John Ross
The Australian – Page: 2 : 15-Dec-17

The Federal Government’s May 2017 Budget had forecast a total deficit of $A46bn over four years. However, Westpac economists Bill Evans and Andrew Hanlan expect the mid-year budget update to revise this down to $A40bn. Westpac also forecasts a deficit of $A1.5bn in 2019-20, followed by a modest surplus in 2020-21. Meanwhile, Prime Minister Malcolm Turnbull has signalled that higher education funding will not be reduced in the budget update, although he has flagged new savings measures after the government’s proposed university funding cuts were rejected by the Senate.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, WESTPAC BANKING CORPORATION – ASX WBC, THE GROUP OF EIGHT LIMITED, GRATTAN INSTITUTE

China behind budget’s improved look

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Original article by Jacob Greber
The Australian Financial Review – Page: 4 : 27-Sep-17

The Federal Government has reported a Budget deficit of $A33.2bn for 2016-17. This is $A4.4bn lower than was forecast in May, and it is the nation’s smallest deficit since 2013. The improvement has been attributed to factors such as higher commodity prices due to continued strong demand in China, as well as reduced government expenditure on welfare as a result of growth in jobs. Goods and services tax and corporate tax revenue also rose.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, DELOITTE ACCESS ECONOMICS PTY LTD, AUSTRALIAN LABOR PARTY

Deficit repair slips even with profit surge: Access

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Original article by Laura Tingle
The Australian Financial Review – Page: 1 & 5 : 1-May-17

Chris Richardson of Deloitte Access Economics is predicting a 2016-17 federal Budget deficit of more than $A38.3 billion, which is $A1.8 billion worse than predicted in the Government’s mid-year forecast. Richardson says that while a rise in company profits will eventually result in improved corporate tax collection, poor wages and jobs growth means that there will not be a comparable rise in personal tax collection. He forecasts that tax revenue will grow by 6.2 per cent in real terms in 2017-18.

CORPORATES
DELOITTE ACCESS ECONOMICS PTY LTD, UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA

Budget in black by 2020: IMF

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Original article by David Uren
The Australian – Page: 1 & 5 : 26-Apr-17

The International Monetary Fund has forecast that the combined Budget deficit of Australia’s federal and state governments will fall to $A39.7bn in calendar 2017, compared with $A45.8bn in 2016. It also forecasts that a $A27bn increase in state and federal government revenue over the next four years will result in a combined Budget surplus of $A2.5bn in 2020. The IMF had previously forecast that a surplus would not be achieved until 2022. The IMF also expects the combined federal and state debt to top $A392.9bn in 2019, before falling to $A375.3bn in 2021.

CORPORATES
INTERNATIONAL MONETARY FUND, AUSTRALIA. DEPT OF THE TREASURY

Budget’s $100bn reality check

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Original article by David Crowe, David Uren
The Australian – Page: 1 & 6 : 19-Dec-16

The Australian Government’s Mid-Year Economic and Fiscal Outlook is expected to show that the combined Budget deficit for the next four years will be close to $A100bn. Finance Minister Mathias ­Cormann has warned that the rally in the price of iron ore and coal will not be sufficient to offset falling revenue from corporate and income tax. The MYEFO is tipped to scale back the May 2016 Budget forecasts for growth in wages and employment.

CORPORATES
AUSTRALIA. DEPT OF FINANCE, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, AUSTRALIA. NATIONAL COMMISSION OF AUDIT, DELOITTE ACCESS ECONOMICS PTY LTD, S&P GLOBAL RATINGS, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

S&P warns deficit must not blow out

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 4 : 23-Nov-16

Craig Michaels of S&P Global Ratings says the Federal Government must return the Budget to surplus by 2020-21 if Australia is to retain its triple-A credit rating. He warns that a rating downgrade is possible if a return to surplus is further delayed, noting that a surplus had been forecast by the former Australian Labor Party government for 2012-13. Michaels also notes the domestic economy’s high reliance on foreign lenders continuing to finance the structural current account deficit.

CORPORATES
S&P GLOBAL RATINGS, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, DELOITTE ACCESS ECONOMICS PTY LTD, McKINSEY AND COMPANY, GREAT BRITAIN. OFFICE OF THE PRIME MINISTER, RESERVE BANK OF AUSTRALIA

Trade surge could cut $23b from deficit

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Original article by Jacob Greber
The Australian Financial Review – Page: 4 : 14-Oct-16

Australia’s 2016-17 Budget deficit is forecast to be $A63.2bn, but analysis shows that a sustained rise in commodity prices could slash the deficit by around $A23bn. The prices of coking coal, thermal coal and iron ore have risen sharply since August 2016, and Commonwealth Bank economist Kristina Clifton says the nation’s terms of trade would improve if prices remain at around current levels for the next six months. She adds that this would also have a flow-on effect on household incomes.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. DEPT OF THE TREASURY, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB