There’s something strange about last week’s federal budget. It reveals remarkably quick progress in getting the budget deficit down to nearly nothing. But then it sees the deficit going back up again. Which shows that, as my former fellow economics editor Tim Colebatch has put it, Rome wasn’t built in one budget.
But in the year that ended soon after the change of government in May, 2021-22, the deficit fell to just $32 billion. And in last week’s second go at the budget for this year, 2022-23, the deficit is expected to be little changed at $37 billion – which would be $41 billion less than what Scott Morrison was expecting at the time of the election six months ago.
Its frugality had one objective: to help the Reserve Bank reduce inflation by first using higher interest rates to reduce people’sBudget repair is top of mind for the government, and for the structural deficit to be removed taxes will have to rise.Keeping the deficit low for another year has, Treasurer Jim Chalmers said this week, changed the “stance” of fiscal policy to “broadly neutral” - neither expansionary nor contractionary.
The deficit won’t go away but, on present policies, will stay too high every year for as far as the eye can see.
1RossGittins The government needs to live within its means. We certainly have to. We want tax cuts, not tax rises.
1RossGittins Compliments of LNP worst government in Australian History
1RossGittins
1RossGittins Raise taxes on Mainstream media!
1RossGittins Or we stop wasting money on children and the elderly. Soylent Green the weak.
1RossGittins They lack leadership and fortitude for that.
1RossGittins It's a barrel of laughs to Jim. Last night's Q&A was a train wreck. We learnt the federal treasurer has no 'real' job or business experience. Just a political staffer, then treasurer of Australia. Now on $500,000 + perks + high income tax cuts & now child care rebates. Clueless.
1RossGittins A good government would undertake root and branch tax reform. A lazy one will scrap stage 3. I think it’s obvious which one we have.
1RossGittins Labor are one term wonders. They are the poverty inflation party.
1RossGittins Then we will see pork barrelling at its best, Labor will target the higher taxes on the LNP base