A stronger economy and the promise of a government “living within its means” was the opening gambit of Treasurer Scott Morrison as he delivered his third Budget to Parliament.
The Treasurer slated a return to surplus within 3 years and a significant improvement to national debt.
- Budget to return to balance in 2019-20, with surplus growing to $11bn in 2020-21
- Real GDP forecast to grow by 2.75% this financial year and 3% the two years following
- Revenue set to grow from an estimated $486bn this financial year to $513bn next financial year
- Net debt to peak this financial year at 18.6% of GDP and fall to 14.7% by 2021-22
- Gross debt to peak during 2019-20 and will reach $558bn in 2027-28; $126bn less than was estimated at the mid-year update in December
- Unemployment to drop to 5.25% in 2018-19
The deficit for this financial year is projected to be $18.2bn, down from $33.2bn last year and is projected to fall to $14.5bn in 2018-19 before returning a small positive balance of $2.2bn in 2019-20.
The positive economic outlook has been supported by higher than expected income and company tax receipts, in addition to a crackdown on the black economy and multinationals, with tech companies singled out by the Treasurer as the “next big challenge”.
While the Budget position has improved over the past year, global trade tensions and external economic uncertainties have the potential to dampen economic growth among Australia’s key trading partners.
The Reserve Bank expects the economy to grow by 3.25% in 2018-19.
Keep in mind
Any changes outlined in the Federal Budget must be passed by both the House of Representatives, which is controlled by the government, and the Senate, where proposed expenditures are subject to examination within Senate estimates hearings. This means any proposed cuts or changes outlined above may not necessarily become law.
Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.