May 02, 2023 00:51 GMT
Larger Share Of Budget Windfall To Be Spent In May Budget
More information is trickling out regarding the May 9 budget. The government is focussed on providing cost-of-living relief while not providing fiscal stimulus that adds to inflation. It continues to talk about providing a responsible budget.
- The budget recorded a $1bn surplus in the financial year to March due to strong commodity prices, low unemployment and higher inflation but the structural position was a deficit of $11.2bn. This is a lot better than expected in October. But Treasurer Chalmers has said that a surplus over the whole year is not a priority in this term, while the FY23 forecasts are likely to be revised to show a smaller deficit.
- Chalmers has said that there would be a “substantial near-term improvement” in the budget but then it would deteriorate after that. Westpac expects the FY23 deficit to be $30bn better than predicted at $6.9bn or 0.3% of GDP and for there to be a $110bn improvement over the forecast horizon.
- Treasurer Chalmers noted that “… no government can satisfy all of the calls for more spending in the budget … particularly at a time when we’ve got persistently high inflation and structural deficits.” But he said that a higher share of the recent revenue windfall will be spent than in October to help cushion the growth slowdown. If this increases demand, that could make the RBA’s job harder in bringing down inflation.
- There is going to be a cost-of-living package for the most vulnerable, including a probable increase in JobSeeker payments for the over 55s, as they are the most likely group to experience long-term unemployment.
- Other measures include $400mn to retain defence personnel and $314mn to cut taxes for SMEs who go “green”.
- The Australian