The Federal Government has “the difficult challenge of meeting multiple goals” when it hands down the 2023/24 Commonwealth Budget next Tuesday 9 May, says Commonwealth Bank of Australia’s Chief Economist Stephen Halmarick, while a sharply lower budget deficit is expected.
In a 2023/24 Budget Preview report published today, Mr Halmarick forecasts a significant reduction in the 2022/23 budget deficit to approximately $A5bn (0.2% of GDP), well below the previous estimate of $A36.9bn (1.5% of GDP) as stronger-than-expected nominal GDP growth this year is boosting revenue and lowering spending.
“The Government has the difficult challenge of meeting multiple goals: maintaining fiscal discipline to assist monetary policy in bringing inflation back to the 2%-3% target range, providing some targeted relief to cost of living pressures, putting in place new arrangements to reverse the projected blowout in spending on a number of large programs, implementing the AUKUS defence policy priorities, further developing climate change policies, implementing some tax reform and moving the medium term budget outlook onto a more sustainable footing,” Mr Halmarick writes.
The report also highlights potential policy/spending initiatives in the 2023/24 Budget may include:
- Relief to household power bills
- Significantly increased defence spending
- NDIS reform and restructure
- An update to the cost of Stage Three tax cuts
The report also sees this improved budget position flowing into 2023/24, although a less positive outlook for following years. “The Government is expected to revise up their nominal GDP growth forecast for 2023/24 – largely on the back of a reported upgrade in commodity price forecasts,” Mr Halmarick comments.
Information for media on CBA’s Budget coverage
Journalists can contact Commonwealth Bank Media ([email protected] or 02 9118 6919) to arrange interviews with Mr Halmarick about the Federal Budget. He will publish a short Budget response by 8.30pm on Tuesday 9 May and a detailed analysis report the following morning. Access our Federal Budget coverage at: commbank.com.au/federalbudget
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