With the federal election expected to be called shortly after the Budget on 2 April 2019, the Budget will form a significant part of the Government’s economic strategy and its policy platform for the election.
The Budget is likely to reconfirm an improvement in the Commonwealth’s fiscal position. The 2019-20 MYEFO forecast a return to surplus in 2019-20 with Commonwealth net debt forecast to peak (as a proportion of GDP) in 2018-19.
The Budget is also likely to contain some significant policy announcements. As the Parliamentary Library has previously noted the MYEFO included just over $10 billion worth of policy decisions taken by the Government which have not yet been announced. It has been speculated that these unannounced measures are further personal income tax cuts, to be revealed in the Budget.
Recent commentary has suggested that higher than expected iron prices, due to the collapse of the Vale tailings dam in Brazil, may lead to increased corporate tax receipts in the short term, providing the Government with scope to forecast higher surpluses or announce larger than anticipated tax cuts. AMP Chief Economist Shane Oliver has suggested that corporate tax receipts could be $2 to $4 billion higher in 2018-19.
However, there remain some downside risks to the International and domestic economy which are discussed further in the pre-budget economic outlook.
The aim of this briefing is to provide some context for the 2019-20 Budget based on the latest economic and fiscal forecasts released at the 2018-19 MYEFO in December 2018. The figures are current at the time of publication but the Government’s economic and fiscal forecasts will be updated with the release of the 2019-20 Budget on 2 April 2019.