Treasurer Scott Morrison’s first budget of the Coalition’s second term in office marked a significant shift in tone from the tough stance of its three previous budgets. Gone is the mantra of debt and deficit. Instead the Treasurer has balanced the government’s resolve to live within its means with promises to tackle the cost of living and provide the services people need to get ahead.
The centrepiece of the budget is the use of ‘good debt’ to fund $75 billion worth of infrastructure projects to create jobs and promote economic growth. To achieve this along with a commitment to returning the budget to surplus it has also introduced measures to cut everyday spending on universities and welfare.
In line with the new distinction between ‘good debt’ and ‘bad debt’, the Treasurer announced that from 2018-19 the government will no longer borrow to pay for everyday expenses.
The Big Picture
The government forecasts an underlying budget deficit of $26.1 billion this financial year, which is lower than the $28.7 billion forecast in the Mid-Year Economic and Fiscal Outlook. The deficit is projected to rise to $29.4 billion in 2018-19. Treasurer Morrison chose not to promise a return to budget surplus, instead saying the budget is ‘projected’ to be back in the black in 2021.
The Government’s estimates are based on economic growth ‘rebounding’ from 2.5 per cent to 2.75 per cent next year and 3 per cent beyond that. Inflation is expected to hover around 2 per cent while unemployment will reduce slightly from 5.75 per cent this financial year to 5.5 per cent next year.
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Federal Budget 2017 – Getting the right balance