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Leading economists predict $33.5bn budget deficit for this financial year
Australia is waving goodbye to budget surpluses and returning abruptly to deficit, facing a $49bn deterioration in the bottom line in forecasts from leading economists, AAP reports.
The $15.8bn surplus logged in the last financial year to Deloitte Access Economics’ prediction of a $33.5bn deficit in 2024/25 would amount to largest nominal contraction in the underlying cash balance on record, outside the pandemic.
The forecast would also represent a $5.2bn mark down from Treasury predictions made in the May budget. DAE partner and report co-author Stephen Smith said:
Worryingly, there is little to suggest that the situation will right itself in the years to come.
As well as the well-documented pressures on the public purse from an ageing population, Smith warned global developments – including China’s economic slowdown and Donald Trump’s return to the White House – did not bode well for Australia’s budget position.
Should substantial tariffs be slapped on imports into the United States, including at rates of up to 60% of goods from China, Australia’s budget will not be immune given its reliance on commodity prices via company tax receipts.
Key events
Minister says under-16 social media age ban a ‘test’ for Dutton’s leadership, as conservative opposition to bill grows
Amanda Rishworth was also asked about Labor’s under-16 social media age ban, and whether the government is rushing this.
She denied this, and said the government has bipartisan support – or so they thought:
Well, I thought there was bipartisan support … I mean, just just a couple of weeks ago, Peter Dutton said he would facilitate this important piece of legislation and support the government. And now we see our senators defying him, I guess. So this is a test for Peter Dutton about his leadership.
Labor’s social media age ban is likely to pass, following a rapid three-day inquiry with just one day to make submissions, and the Coalition claiming credit for having suggested it first. However, conservative opposition to the bill has been growing in the lead up to the lower house vote:
Rishworth defends government economic decisions amid latest outlook
The social services minister Amanda Rishworth spoke with the Today Show just earlier, where she defended the government’s handling of the economy amid the latest outlook:
We inherited a pretty big economic mess from the Liberal and National party when we came to government, we had inflation with a six in front of it. We inherited a policy from the Liberal party that was deliberately keeping wages low.
Listing measures the government has taken, Rishworth pointed to lowering inflation, wages growth, cost of living measures and the stage three tax cuts. She went on to say:
The alternative would have been if Peter Dutton was in in the prime minister chair. He’s opposed every single one of these measures and we would be in a real recession right now if he had got his way on so many policy issues.
Nationals senator Bridget McKenzie was also on the program, and argued “Australians are feeling poorer because they actually are poorer under Albanese.” She took aim at government spending, and said this was why “in comparable nations, our numbers are in the toilet comparatively”.
Queensland premier David Crisafulli begins first sitting week as premier
Queensland’s new premier, David Crisafulli, will be only the second member of the modern Menzies Liberal party to sit in the top chair when he begins his first sitting week today.
The “conservative, uniquely agrarian state” has been governed by Labor or Country National premiers for all but 1,000 days since 1860 but now it’s Crisafulli’s turn to show he can deliver on his promises to slash crime.
Read our analysis of what lies in store:
Good morning
Emily Wind
Emily Wind here, signing on for blogging duties. Thanks to Martin for kicking things off for us.
We’re in the home stretch, with just three days left in the final sitting week of the year. You’ll have the whole Canberra team bringing you the latest – Karen Middleton, Paul Karp, Josh Butler, Sarah Basford Canales and Mike Bowers, capturing all the action.
Let’s get into it.
More on that Deloitte report from AAP: ‘The time will come for changes to tax’
The economists were hopeful inflation would keep a lid on election spending sprees, as cost-of-living support eases pain but injects money into the economy – adding to the problem it’s trying to solve.
The treasurer has already been managing expectations before the midyear budget update next month.
In a speech, Jim Chalmers warned windfalls would be nought but a “sliver” of upgrades clocked in the past few years.
Higher commodity prices and a higher tax take from migration and bracket creep have helped the federal government deliver the first two back-to-back surpluses in almost two decades.
DAE partner and report co-author Cathryn Lee said the government still deserved credit for banking most of the revenue rather than spending it, especially during a cost-of-living crunch when the community has been calling for support.
Yet she said both major political parties had broadly failed to embark on the structural budget repair needed over the past two decades.
“The time will come for changes to tax,” she said. “It must.”
Leading economists predict $33.5bn budget deficit for this financial year
Australia is waving goodbye to budget surpluses and returning abruptly to deficit, facing a $49bn deterioration in the bottom line in forecasts from leading economists, AAP reports.
The $15.8bn surplus logged in the last financial year to Deloitte Access Economics’ prediction of a $33.5bn deficit in 2024/25 would amount to largest nominal contraction in the underlying cash balance on record, outside the pandemic.
The forecast would also represent a $5.2bn mark down from Treasury predictions made in the May budget. DAE partner and report co-author Stephen Smith said:
Worryingly, there is little to suggest that the situation will right itself in the years to come.
As well as the well-documented pressures on the public purse from an ageing population, Smith warned global developments – including China’s economic slowdown and Donald Trump’s return to the White House – did not bode well for Australia’s budget position.
Should substantial tariffs be slapped on imports into the United States, including at rates of up to 60% of goods from China, Australia’s budget will not be immune given its reliance on commodity prices via company tax receipts.
Tensions high outside Melbourne synagogue
Tensions ran high outside a synagogue in Melbourne last night as pro-Israel supporters gathered to counter a pro-Palestine protest despite the rally being cancelled, AAP reports.
A number of pro-Israel demonstrators rallied outside a popular synagogue even after the planned pro-Palestine protest was formally called off at the 11th hour as organisers cited safety concerns.
Despite the cancellation, there was a visible police presence near the synagogue in Caulfield North, in Melbourne’s south-east, where a sea of Israeli flags far outnumbered the Palestinian flags.
Specialist police encircled a small group of pro-Palestine supporters in an attempt to keep them from the larger pro-Israel group.
The planned demonstration was in response to a planned talk organised by the Australia/Israel and Jewish Affairs Council that includes former Israeli justice minister Ayelet Shaked, whose visa into Australia was reportedly rejected.
It also comes as Australia’s Palestinian community demands answers after a dentistry student was struck by shrapnel in the Israeli-occupied West Bank.
Here’s our story:
Welcome
Good morning and welcome to our live politics blog. I’m Martin Farrer with the top overnight stories and then it will be my colleague Emily Wind to take you through the bulk of the day in Canberra and beyond.
Our top story this morning surrounds Labor’s resolve to force the big tech companies to enforce its proposed ban on under-16s’ use of social media after the Silicon Valley heavyweights pushed back against the legislation. Meta said the bill is “inconsistent and ineffective” and that it should be delayed until there is more time to develop age verification technology.
The big moment yesterday was the Greens’ acquiescence to the government’s housing bill – a harsh lesson in realpolitik handed to Adam Bandt and Max Chandler-Mather by the prime minister.
Tensions were running high on the streets of a Melbourne suburb last night as pro-Israel demonstrators rallied after the threat of a pro-Palestine protest outside a synagogue. More on that soon.
And more soon on a report from Deloitte that forecasts the government faces a huge budget deficit, running into the tens of billions.