The Treasurer Wants a Surplus Whether You like It or Not
Channel: Daily Insight
Date: 2019-12-17

Josh Frydenberg, Treasurer of Australia, has one obsession — to deliver a budget surplus at all costs — economy be damned! Yesterday he released the Mid-Year Economic and Fiscal Outlook, the so-called MYEFO document, which shows that the Government are continuing to promise surpluses over the next four years despite them having been revised downwards since the April 2019 budget. Originally, Mr Frydenberg trumpeted $45 billion in surpluses over the next four years in the lead up to the May 2019 federal election, but now the forecasts have been slashed to almost half that falling to $23.5 billion. Thanks to the reduced budget surpluses, the Government had to abandon its pledge to wipe out net debt within a decade, but instead expects debt to be around 2% of GDP by 2030. The forecast for GDP growth has also been slashed from 2.75% to 2.25% going against the Government’s election pitch that they would make the economy even stronger. Unemployment has been revised upwards from 5% to 5.25%. Wage growth has also been revised downwards from 2.75% to 2.5%. Household consumption has really taken a hit. It has been revised downwards from 2.75% to 1.75%. If households don’t spend, the economy falters. We can also see that the forecasts for business investment are way down, falling from 5% to 1.5%. That could only be described as a collapse. All these figures show one thing — the economy is weak — as weak as we’ve seen since the early 1990s recession. But at least during previous times of economic weakness, the Government have been willing to spend, but unfortunately the current Government is obsessed with maintaining a budget surplus at all costs. As I said before, economy be damned!

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Josh Frydenberg April 2019 by Julian Meehan [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0)]

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