Last night (2 April 2019) the Treasurer, Mr Josh Frydenberg handed down the 2019-20 Federal Budget, being the last Budget of the current Coalition Government before the next (May 2019) Federal Election.
The cash budget surplus, the first in 12 years, is estimated to be $7.1bn for 2019-20 (up from $2.2bn as estimated last May) representing around 0.4% of estimated GDP. The budget position is predicted to improve over the forward estimates, with a total of $45b of surpluses over the four years to 2022-23. The budget position over the forward estimates is as follows:
|% of GDP||0.4%||0.5%||0.8%||0.4%|
Included in the Budget materials is the admirable goal of eliminating Commonwealth net debt (expected to be 19.2% of GDP for 2018-19 with an accompanying annual interest cost of $18bn) by 2029-30.
GDP growth is predicted to be 2.75% in 2019-20, up from the likely outcome for 2018-19 of 2.25%, and then remaining steady at 2.75% for 2020-21 as the growth in the global economy is expected to ease. The unemployment rate for 2019-20 is forecast to remain constant at 5%, the same as for 2018-19, but down from 5.4% for 2017-18. The CPI is estimated to increase to 2.25% for 2019-20, up from the likely outcome of 1.5% for 2018-19.
This year’s Budget contains a plan to build a stronger economy. Mr Frydenberg says that the plan does this in three ways:
1. It restores the nation’s finances;
2. It strengthens the economy and creates more jobs through a significant new skills and infrastructure agenda;
3. It guarantees essential services such as hospital, schools and aged care, while tackling the cost of living.
Importantly, he says the plan does this without increasing taxes.
The Budget does not seem to be the ‘election manifesto’ some commentators were predicting. Only time will tell whether the Coalition will remain in power to see their plans fully implemented.