Leading economists predict $33.5bn budget deficit for this financial year
Australia is waving goodbye to budget surpluses and returning abruptly to deficit, facing a $49bn deterioration in the bottom line in forecasts from leading economists, Australian Associated Press reports.
The $15.8bn surplus logged in the last financial year to Deloitte Access Economics’ prediction of a $33.5bn deficit in 2024/25 would amount to largest nominal contraction in the underlying cash balance on record, outside the pandemic.
The forecast would also represent a $5.2bn mark down from Treasury predictions made in the May budget.
“Worryingly, there is little to suggest that the situation will right itself in the years to come,” DAE partner and report co-author Stephen Smith said.
As well as the well-documented pressures on the public purse from an ageing population, Smith warned global developments – including China’s economic slowdown and Donald Trump’s return to the White House – did not bode well for Australia’s budget position.
“Should substantial tariffs be slapped on imports into the United States, including at rates of up to 60% of goods from China, Australia’s budget will not be immune given its reliance on commodity prices via company tax receipts,” he said.
Key events
Good morning
Emily Wind
Emily Wind here, signing on for blogging duties. Thanks to Martin for kicking things off for us.
We’re in the home stretch, with just three days left in the final sitting week of the year. You’ll have the whole Canberra team bringing you the latest – Karen Middleton, Paul Karp, Josh Butler, Sarah Basford Canales and Mike Bowers, capturing all the action.
Let’s get into it.
More on that Deloitte report from AAP
The economists were hopeful inflation would keep a lid on election spending sprees, as cost-of-living support eases pain but injects money into the economy – adding to the problem it’s trying to solve.
The treasurer has already been managing expectations before the midyear budget update next month.
In a speech, Jim Chalmers warned windfalls would be nought but a “sliver” of upgrades clocked in the past few years.
Higher commodity prices and a higher tax take from migration and bracket creep have helped the federal government deliver the first two back-to-back surpluses in almost two decades.
DAE partner and report co-author Cathryn Lee said the government still deserved credit for banking most of the revenue rather than spending it, especially during a cost-of-living crunch when the community has been calling for support.
Yet she said both major political parties had broadly failed to embark on the structural budget repair needed over the past two decades.
“The time will come for changes to tax,” she said. “It must.”
Leading economists predict $33.5bn budget deficit for this financial year
Australia is waving goodbye to budget surpluses and returning abruptly to deficit, facing a $49bn deterioration in the bottom line in forecasts from leading economists, Australian Associated Press reports.
The $15.8bn surplus logged in the last financial year to Deloitte Access Economics’ prediction of a $33.5bn deficit in 2024/25 would amount to largest nominal contraction in the underlying cash balance on record, outside the pandemic.
The forecast would also represent a $5.2bn mark down from Treasury predictions made in the May budget.
“Worryingly, there is little to suggest that the situation will right itself in the years to come,” DAE partner and report co-author Stephen Smith said.
As well as the well-documented pressures on the public purse from an ageing population, Smith warned global developments – including China’s economic slowdown and Donald Trump’s return to the White House – did not bode well for Australia’s budget position.
“Should substantial tariffs be slapped on imports into the United States, including at rates of up to 60% of goods from China, Australia’s budget will not be immune given its reliance on commodity prices via company tax receipts,” he said.
Tensions high outside Melbourne synagogue
Tensions ran high outside a synagogue in Melbourne last night as pro-Israel supporters gathered to counter a pro-Palestine protest despite the rally being cancelled, Australian Associated Press reports.
A number of pro-Israel demonstrators rallied outside a popular synagogue even after the planned pro-Palestine protest was formally called off at the 11th hour as organisers cited safety concerns.
Despite the cancellation, there was a visible police presence near the synagogue in Caulfield North, in Melbourne’s south-east, where a sea of Israeli flags far outnumbered the Palestinian flags.
Specialist police encircled a small group of pro-Palestine supporters in an attempt to keep them from the larger pro-Israel group.
The planned demonstration was in response to a planned talk organised by the Australia/Israel and Jewish Affairs Council that includes former Israeli justice minister Ayelet Shaked, whose visa into Australia was reportedly rejected.
It also comes as Australia’s Palestinian community demands answers after a dentistry student was struck by shrapnel in the Israeli-occupied West Bank.
Here’s our story:
Welcome
Good morning and welcome to our live politics blog. I’m Martin Farrer with the top overnight stories and then it will be my colleague Emily Wind to take you through the bulk of the day in Canberra and beyond.
Our top story this morning surrounds Labor’s resolve to force the big tech companies to enforce its proposed ban on under-16s’ use of social media after the Silicon Valley heavyweights pushed back against the legislation. Meta said the bill is “inconsistent and ineffective” and that it should be delayed until there is more time to develop age verification technology.
The big moment yesterday was the Greens’ acquiescence to the government’s housing bill – a harsh lesson in realpolitik handed to Adam Bandt and Max Chandler-Mather by the prime minister.
Tensions were running high on the streets of a Melbourne suburb last night as pro-Israel demonstrators rallied after the threat of a pro-Palestine protest outside a synagogue. More on that soon.
And more soon on a report from Deloitte that forecasts the government faces a huge budget deficit, running into the tens of billions.
