It’s been a long time since the federal government managed to live within its means.
In fact, the last budget surplus was delivered when John Howard was prime minister.
But the Morrison government is on track to do so again. And the surplus could be as high as $11 billion, on the back of bigger-than-expected tax revenues.
As the Australian Associated Press reports, Treasurer Josh Frydenberg will release his first budget update on Monday. In it will be the coalition’s revised budget projections, as well as proof as to whether he has accomplished his vow to deliver a surplus to the Aussie federal budget in FY19/20.
Well, PM ScoMo is confident in a positive result.
Coalition fulfilling their budget promises
Morrison seems to be carrying little doubt that the mid-year fiscal and economic outlook —which Frydenberg’s report will outline — will show evidence of better financial management, which the government has promised the nation.
Morrison said as much to reporters in South Australia this week, stating bluntly:
‘We promised to bring the budget back into surplus and that’s exactly what we’re doing.
‘We promised to create a stronger economy and that’s exactly what we’re doing.’
It seems Morrison isn’t the kind of guy to go back on his pinky-swears.
But it isn’t just a better future which Morrison and his team are committing to. The budget update will also outline improved figures for our current 2018/19 budget year.
Thanks to a spike in tax revenues, Deloitte Access Economics predict a further $9.2 billion in revenue for the government than the May budget forecast.
This forecast suggested a $14.5 billion deficit for the 2018–19 financial year, followed by a $2.2 billion surplus in 2019/20.
But economist Chris Richardson has calculated higher hopes. He thinks this financial year’s deficit will be just $4.9 billion, which will lead to a whopping $4.2 billion surplus the following year.
CommSec chief economist Craig James predicts little deficit for this year, followed by a $4 billion surplus, on account of lower-than-forecasted spending.
‘Both sides of the ledger are contributing to the improvement that we’re seeing in terms of the budget bottom line,’ he says.
Westpac envisions an even more appealing 2019/20 surplus figure of $7.2 billion.
And AMP Capital chief economist Shane Oliver is even more optimistic. Though he believes this year’s deficit will reach $6 billion, he sees it being followed by an $11 billion surplus in the year that follows, and a continued upward climb from that.
He explained his reasoning to AAP:
‘It’s mainly been because of stronger tax collections, as a result of stronger employment and higher corporate tax revenues.’
So the good times have already started, apparently.
Of course, as always, there are those who insist on remaining sceptical.
Proof yet to be set in stone?
Shane Oliver and Craig James both noted that the Morrison government may choose to increase spending as the 2019 election dawns closer.
They also found a slight issue in the May budget’s forecast, which based their calculations on a 2.75% wage growth for this year. This, the two economists say, is almost a bit of an inflated figure.
And of course, Labor is doing the usual ‘saying they’re doing the thing doesn’t mean they’re ACTUALLY doing the thing’ argument.
‘They are forecasting a surplus. They told us they are forecasting a surplus. Fair enough, but that is not delivering a surplus,’ shadow treasurer Chris Bowen told reporters during the last week of federal parliament.
He went on to argue that this boom in surplus will come about on the ‘back of taxpayers’ who will have to carry the weight of the figure.
Well, all will be revealed on 17 December, when the budget update is released.
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