The federal budget is in, and the headline numbers point to a stronger position than previously forecast.
The budget deficit for 2021/22 landed at a forecast $79.8 billion, lower than the $99bn flagged by the government in December. The better-than-expected performance continues into the years to 2025/26, the combined deficits over the period expected to improve by $114bn.
“So that’s given them extra money to put into the economy, but also to address the huge debt issue we’re now facing,” said Westpac chief economist Bill Evans, in a conversation with fellow economist Elliot Clarke.
Mr Evan’s said the budget struck the right balance between short term support and long-term fiscal healing, although the spending was “a bit more than expected”, as outlined in the economist’s analysis of the budget.
“There’s three parts, the short-term support and we saw that in the cost of living payment, … the reduction in the petrol levy, and we also saw the surprise which was half of the low and middle income tax offsets being brought forward by a year to give people another $420 from July this year,” Mr Evans said.
In addition to these cost-of-living initiatives, other spending targeted a stronger economy and more jobs, education, defence and national security, and infrastructure and housing – stimulating supply over the longer term.
“And so generally the balance looked to be about right, with about two thirds of it going towards fiscal repair,” Mr Evans said.
See Westpac’s full analysis of the Federal Budget.
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