FISCAL POLICY – AUSTRALIA

Chalmers to fight inflation, then spend

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 7-May-24

The federal government’s budget on 14 May will show that Australia’s gross debt has risen to $904bn in 2023-24; this is about $152bn lower than was forecast ahead of the 2022 federal election. However, the nation’s debt-to-GDP ratio is expected to rise from 33.7 per cent in the current financial year to 35.1 per cent by 2025-26. Meanwhile, Treasurer Jim Chalmers has signalled that combating inflation will be the key focus of the 2024 budget, while he has flagged an increase in government spending over the forward estimates period.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

Chalmers to fight inflation, then spend

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 7-May-24

The federal government’s budget on 14 May will show that Australia’s gross debt has risen to $904bn in 2023-24; this is about $152bn lower than was forecast ahead of the 2022 federal election. However, the nation’s debt-to-GDP ratio is expected to rise from 33.7 per cent in the current financial year to 35.1 per cent by 2025-26. Meanwhile, Treasurer Jim Chalmers has signalled that combating inflation will be the key focus of the 2024 budget, while he has flagged an increase in government spending over the forward estimates period.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

$13b surplus tipped but Labor needs credible plan

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Original article by Ronald Mizen
The Australian Financial Review – Page: 7 : 1-May-24

Deloitte Access Economics expects the federal government to post a budget surplus of $13.4bn for 2023-24. The government itself had forecast a full-year deficit of $1.1bn in its mid-year economic and fiscal outlook in December. Deloitte says the budget bottom-line will be boosted by $14.5bn in additional company tax receipts and a $5.6bn increase in personal income tax revenue due to the strong labour market. Deloitte partner Stephen Smith says that while Labor is on track for a second successive budget surplus, this is unlikely to be repeated in 2024-25 due to the goverment’s spending plans. Smith adds that the Future Made in Australia policy could further undermine the budget position.

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DELOITTE ACCESS ECONOMICS PTY LTD

Tax take and spending near record highs

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Original article by Michael Read
The Australian Financial Review – Page: 6 : 8-Mar-24

Analysis of the latest national accounts data shows that federal, state and local government spending equated to 27.2 per cent of GDP in 2023, which is nearly a record high. Tax revenue across all three levels of government was also a near-record high of 30.3 per cent of GDP. Treasurer Jim Chalmers has indicated that his primary focus will shift from containing inflation to stimulating the economy. However, he has ruled out a big increase in government spending, while economists contend that reducing debt should be the federal government’s priority.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

Tax bounty brings record $22b surplus

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Original article by John Kehoe
The Australian Financial Review – Page: 5 : 22-Sep-23

The federal government will confirm on Friday that the budget surplus for 2022-23 was $22.1bn. This represents a significant turnaround from the $77.9bn deficit that former treasurer Josh Frydenberg had forecast in March 2022. It will also be the first surplus since 2007-08 and the first under a Labor government since Paul Keating was treasurer more than three decades ago. Treasurer Jim Chalmers says Labor has delivered a surplus while providing cost-of-living relief and investing in the long-term growth of the economy. The budget bottom-line was boosted by factors such as high commodity prices and rising income tax revenue due to a strong labour market.

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AUSTRALIA. DEPT OF THE TREASURY

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.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

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

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

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

Fast-track tax cuts off budget plan

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Original article by Simon Benson, Geoff Chambers
The Australian – Page: 1 & 6 : 16-Mar-22

Senior federal government sources have indicated that bringing forward the stage-three income tax cuts will not be on the agenda for the Budget on 29 March. The government will instead seek to address cost-of-living pressures with temporary and targeted assistance. The final stage of the government’s tax cuts package is slated to take effect in 2024-25; Deloitte Access Economics partner Chris Richardson says bringing forward the tax cuts is not necessary given that Australia’s unemployment rate is close to a five-decade low, and he warns that such a move would risk driving up inflation. The government has also considered extending the low-and-middle-income tax offset for another year.

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DELOITTE ACCESS ECONOMICS PTY LTD