In surplus …for now
The surplus was driven by a surge in the corporate and individual tax take. High commodity prices, inflation, and high employment have all pushed up corporate and individual tax receipts. But the gains can’t be relied on long term. The Budget is expected to deliver a deficit of $13.9 billion in 2023-24, and a $35.1bn deficit in 2024-25.
Inflation to drop to 3.25%
While remaining persistently high for longer than anticipated, inflation is expected to fall from 6% to 3.25% in 2023-24.
The $3bn energy relief partnership with the states and territories and the temporary price cap on gas and black coal, are estimated to lower inflation by 0.75% in 2023-24.
Debt still an issue
Gross debt to GDP is expected to peak lower and earlier at 36.5% of GDP in 2025-26. While $154bn less than the March 2022 expectations, it is an eye watering $1.015 trillion. Net debt rises steadily to 24.1% of GDP to $702.9bn in 2026-27. And, this is assuming the Government can deliver on its anticipated savings reigning in the National Disability Insurance Scheme from a growth rate of 14% to 8%.
Growth slow down
Growth is expected to slow. Real GDP growth is expected to slow to 1.5% in 2023-24, before rising to 2.25% in 2024-25.
Unemployment remains low
The unemployment rate is projected to remain low by historical standards, rising modestly to 4.25% in 2023–24 and 4.5% per cent in 2024-25.
Notable Budget savings include:
- Tax on super balances above $3m
- Compliance programs matched to the ‘payday’ super guarantee changes
- Reforms to how liquid natural gas projects are taxed
- Implementing a global minimum tax and a domestic minimum tax
All up, the Government expects $13.7bn in improvements related to tax receipt measures.