GOVERNMENT SPENDING POLICY – AUSTRALIA

Government spending splurge props up GDP

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 5 : 4-Dec-24

Data from the Australian Bureau of Statistics shows that federal and state government spending totalled $195.8bn in the September quarter. This is eight per cent higher year-on-year, and compares with average annual spending growth of 5.3 per cent in the decade prior to the pandemic. The ABS notes that recurrent government spending increased by 1.4 per cent in the quarter, which is partly due to federal and state government electricity bill subsidies. Meanwhile, Westpac says government spending is set to reach a record 27.8 per cent of GDP in the quarter, compared with 27.3 per cent in the three months to June. National accounts data to be released on Wednesday is expected to show that annual GDP growth rose to 1.1 per cent in September.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, WESTPAC BANKING CORPORATION – ASX WBC

ALP hidden spending to top $87b

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 6 : 27-Nov-24

The federal government’s growing trend towards ‘off-budget’ spending will be a key contributor to the overall deficit blowout that Deloitte Access Economics has forecast. The firm expects the government to post an underlying deficit of $33.5bn for 2024-25, but it estimates that the headline deficit will be $54.8bn. Economist Chris Richardson says the latter figure deserves greater scrutiny, as it can be used to conceal the real state of the nation’s finances. So-called off-budget spending – which does not affect the budget deficit or surplus – is forecast to reach a record $87.1bn over the next four years.

CORPORATES
DELOITTE ACCESS ECONOMICS PTY LTD

Resist your urge to splurge, ALP told

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Original article by Jack Quail
The Australian – Page: 1 & 5 : 6-Nov-24

The Reserve Bank of Australia’s decision to leave the cash rate unchanged at 4.35 per cent on Tuesday had been widely expected. The RBA remains focused primarily on underlying inflation, which governor Michele Bullock says is still too high for the central bank to consider reducing the cash rate. Underlying inflation was 3.5 per cent in the year to September, and Bullock notes that temporary electricity rebates contributed to the headline inflation rate falling to 2.8 per cent. Bullock has also emphasised the need for Treasurer Jim Chalmers to avoid any spending measures that may fuel inflation ahead of the federal election.

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

Sex work, yoga banned from disability scheme

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Original article by Tom McIlroy
The Australian Financial Review – Page: 4 : 2-Oct-24

The federal government’s first list of approved services for National Disability Insurance Scheme participants will take effect on Thursday. Participants will be banned from using their NDIS funding to pay for a range of products and services; this includes groceries, cigarettes, accommodation costs, sex work and cuddle therapy. Items on the approved list include assistance animals, mobility supports, transport costs, prostheses and nursing care. There will be a 12-month transition period, and NDIS Minister Bill Shorten says remedial action will only be taken if there has been a clear breach of the rules.

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Public sector jobs boom a poor investment

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Original article by Michael Read
The Australian Financial Review – Page: 5 : 10-Sep-24

Treasurer Jim Chalmers has contended that government spending prevented the economy from recording negative growth in the June quarter. Strong jobs growth in the public service over the last year was a key driver of government spending over the quarter. However, analysis of the latest national accounts data shows that productivity in the public service – as well as government-funded sectors such as health and education – fell to 2006 levels during the quarter. IFM Investors’ chief economist Alex Joiner says jobs growth in these ‘non-market sectors’ are fuelling the decline in productivity; he adds that when these sectors are excluded, productivity is quite good.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, IFM INVESTORS PTY LTD

Coalition’s $100bn savings formula

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Original article by Simon Benson
The Australian – Page: 1 & 4 : 27-Aug-24

Shadow treasurer Angus Taylor says the Coalition will pursue a ‘back to basics’ economic agenda if it wins the next federal election. The Coalition has identified nearly $100bn worth of savings it can make by scrapping government programs and initiatives. They include the Housing Australia Future Fund, the Rewiring the Nation program and the Future Made in Australia policy. Taylor says the government’s excessive spending is driving up the longer term inflation rate, and notes this has been acknowledged by the Reserve Bank.

CORPORATES
LIBERAL PARTY OF AUSTRALIA, RESERVE BANK OF AUSTRALIA

GovERP IT flop the latest in $2.2b lost on projects

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Original article by Tom Burton
The Australian Financial Review – Page: 10 : 20-Aug-24

The federal government has cancelled the cloud-based GovERP project that had been commissioned by its Coalition predecessor. Nearly $341m has been spent on the all-of-government enterprise resource planning project since 2019, and an expert panel has concluded that the GovERP platform cannot be "repurposed" for use by government agencies such as Services Australia. The government has now cancelled about $2.2bn worth of IT projects that were initiated by the Coalition, including a business registry project for the Treasury that was set to be delivered five years and at a major cost blowout.

CORPORATES
AUSTRALIA. SERVICES AUSTRALIA

Focus campaign on cost of living, PM tells party

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Original article by Phillip Coorey
The Australian Financial Review – Page: 4 : 26-Jun-24

Prime Minister Anthony Albanese told a meeting of Labor’s caucus on Tuesday that his government’s MPs must prioritise the cost-of-living crisis, arguing that it is the top issue among voters. A number of cost-of-living relief measures that were announced in the 14 May budget will take effect from 1 July, in addition to the stage-three income tax cuts and an increase in the minimum wage. Albanese has also warned the Coalition to expect a union campaign against its nuclear energy policy; he said unions know that the policy will destroy jobs, undermine the manufacturing industry and result in higher electricity prices.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIAN LABOR PARTY

Treasurer on the defensive as RBA raises alarm over big-spending budgets

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 19-Jun-24

Reserve Bank governor Michele Bullock says the central bank’s board is prepared to "do what is necessary" to restore inflation to its target range by mid-2025. The RBA’s decision on Tuesday to leave the cash rate unchanged at 4.35 per cent had been widely expected by economists. Bullock has indicated that the board had considered a rate rise, while a rate cut had not been on the agenda; she notes that the inflation figures for April were "a bit higher than expected". The RBA also expressed concern in its monetary policy statement that cost-of-living relief and other spending measures in federal and state budgets may fuel inflation. However, Treasurer Jim Chalmers says the government’s strategy is "the right one".

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

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