Australian budget

I noted earlier this week how the federal budget is facing a decade of deficits.

Westpac Senior Economist Pat Bustamante estimates that “high nominal income growth on the back of elevated commodity prices, strong wages growth and high inflation, along with record population growth, have combined to deliver a budget windfall of $252.1 billion over the six years to 2027-28, since the October 2022 budget”.

The 2024-25 Tax Expenditure and Insights Statement was released on Wednesday by the Australian Treasury.

The 2024-25 Tax Expenditure and Insights Statement was released on Wednesday by the Australian Treasury. It showed that deductions for rental losses on investment properties (i.e., negative gearing) are forecast to rise from $21,000 million in 2022–23 to $32,400 million in 2027–28.

Justin Fabo from Antipodean Macro has compiled the following table summarising the key figures from Wednesday’s Mid-Year Economic and Fiscal Update (MYEFO).

The AFR’s Michael Read has done some great analysis on today’s Mid-Year Economic and Fiscal Outlook (MYEFO), which showed that the federal government will spend a record $90 billion “off-budget” over the next four years, obscuring the true situation facing the budget.

Victoria has the highest per capita debt in the nation and the lowest credit rating.

Independent economist Tarric Brooker published the following breakdown of mining company tax receipts between 2015-16 and 2022-23: The data was derived from a May 2024 Minerals Council Report, which sourced its figures from the ATO and Ernst and Young estimates.

The Q3 national accounts from the Australian Bureau of Statistics (ABS) revealed that public expenditures reached a record-high share of Australian GDP. This spending explosion has been driven by massive infrastructure investments (mainly from the states) and public consumption spending (e.g., the NDIS).

A new report from the Tax Justice Network estimates that Australia lost $US24 billion from offshore tax evasion by multinational companies.

Economist Chris Richardson has posted an analysis on Twitter (X) showing that “Lady Luck has shone on Jim Chalmers, handing the budget truly magnificent manna from heaven”.

Victoria has the nation’s largest per capita debt and the lowest credit rating.

Deloitte Access Economics expects the federal government to post an underlying budget deficit of $33.5 billion for 2024–25, following a surplus of $15.8 billion for the 2023–24 financial year.

We have repeatedly warned that Victoria’s state debt burden is problematic.

The Future Fund, which is one-third the size of the Australian economy, will be directed to invest in housing, security, and the green energy transition “where possible, appropriate, and consistent with strong returns”.

Data from the Australian Bureau of Statistics (ABS), published in The Australian, shows that 26,100 permanent positions have been added to the federal public service since Labor took office in May 2022.

The prospect of Donald Trump winning this week’s US election has Australia’s business lobby laying the groundwork for a cut to Australia’s company tax rate.

The former Grattan Institute Transport and Cities Program director, Marion Terrill, has lambasted the Victorian government for pursuing the “ruinously expensive” Suburban Loop Project (SRL), which risks burying taxpayers in debt.

Behold the DXY express elevator: And AUD lift to hell: North Asia is no help: Gold and DXY do not move like this together.

The Australian Chamber of Commerce and Industry (ACCI) has called on both sides of politics to address the issue of tax reform in the lead-up to the next federal election, with CEO Andrew McKellar noting that it is now over 25 years since the GST was introduced.

Analysis by consulting firm EY suggests that the federal government will need to borrow about $90 billion in 2024-25 to finance its spending programs.

The National Disability Insurance Scheme (NDIS) presently costs around $42 billion and has a higher annual operating cost than aged care ($36 billion), Medicare ($32 billion), federal hospital financing ($30 billion), and medicines ($20 billion).

I wrote on Monday about how global ratings agency Standard and Poors has warned the Victorian government that it risks a credit rating downgrade and spiralling debt repayments if it proceeds with the $200 billion Suburban Rail Loop (SRL) boondoggle.