Last night (8 May 2018) the Treasurer, Mr Scott Morrison, handed down the 2018-19 Federal Budget, being his third Budget and the current Coalition Government’s second since the last (2016) Federal Election.

A key component of the Budget is delivering tax cuts to low and middle income earners, which will be phased in from the 2019 year.

There is also a strong focus on greater integrity in the tax system through the Black Economy measures and other more targeted and specific amendments.

The cash budget deficit is estimated to be $14.5b for 2018-19 (down from $29.4b as estimated last May) representing around 1.0% of estimated GDP.  The budget position is predicted to return to a modest surplus in 2019-20.  The budget position over the forward estimates is as follows:

Year 2018-19 2019-20 2020-21 2021-22
Surplus/Deficit ($14.5b) $2.2b $11.0bn $16.6bn
% of GDP (1.0%) 0.1% 0.5% 0.8%

 

Real GDP growth is predicted to be 3% in 2018-19 (up from the likely outcome for 2017-18 of 2.75% but as expected at May last year) and remaining steady at 3% for 2019-20.  The unemployment rate for 2018-19 is forecast to fall slightly to 5.25% from the current rate of 5.5% for 2017-18 and then remain at 5.25% for 2019-20.  The CPI is estimated to increase slightly in 2018-19 to 2.25% up from the 2% estimated for 2017-18.

Mr Morrison said that this year’s Budget contained five things that the Government “must do to further strengthen our economy to guarantee the essentials Australians rely on” being:

  1. Provide tax relief to encourage and reward working Australians
  2. Keep backing business to invest and create more jobs
  3. Guarantee the essential services that Australians rely on
  4. Keep Australians safe with new investments to secure our borders
  5. Ensure that the Government lives within its means

The Government ‘living within its means’ concept has been a theme in all of Mr Morrison’s Budgets, and this year’s Budget is not the typical ‘cash splash pre- Election budget’.

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