Australia’s Budget is on track for a small deficit but households remain under pressure with slow wage growth and no new cost of living support. Source: 9news.com.au.
The Mid-Year Economic and Fiscal Outlook (MYEFO) for 2023 to 2024 revealed $64.4 billion in tax heading into the Commonwealth Government’s pocket due to commodity prices, non-mining corporate profits and strong employment growth.
This means a small deficit is forecast for the next financial year of $12.8 billion after the Government scored the first surplus in 15 years in 2022/2023.
The Government has also identified $9.8 billion in savings and reprioritisations which will banked rather than spent as Treasurer Jim Chalmers pushes towards a smaller bottom line.
The MYEFO forecasts inflation to return to the target band of 2.75 per cent in the June quarter of 2025 after peaking. However, it expects headline inflation to remain at 3.75 per cent this financial year.
While the latest budget update delivered a paper-thin deficit, household budgets remain under pressure.
Real wage growth was forecast to be 0.75 per cent this year but instead, it has been revised to 0.25 per cent. Although, positively, growth is returning in early 2024, it is a blow to households struggling with the cost of living pressures.
The MYEFO didn’t announce any new cost of living sweeteners for Australians, relying on the $23 billion in announcements from the May budget.
It comes as the Treasurer avoids over-stimulating the economy as it fights inflation.
“We understand that Australians are doing it tough and that our economy is slowing and that is why we are rolling out tens of billions of dollars in relief and fixing the budget and making welcome and encouraging progress in this fight against inflation,” Mr Chalmers said.
Budget’s bottom line improves as household pressures remain (By Savannah Meacham, 9news.com.au)