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:
|% 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:
- Provide tax relief to encourage and reward working Australians
- Keep backing business to invest and create more jobs
- Guarantee the essential services that Australians rely on
- Keep Australians safe with new investments to secure our borders
- 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’.