The tightrope walker budget

By AdNews | 15 May 2024
Credit: Gabriel Aguirre via Unsplash

The 2024 federal budget charts a narrow path between inflation and recession.

Mark Thirlwell, chief economist at the Australian Institute of Company Directors, describes the budget as a kind of macro-political juggling act, working hard to keep multiple balls aloft.

“I’ve drawn on the metaphor of a tightrope walker seeking to traverse a narrow course between inflation risk on the one side and recession risk on the other,” Thirlwell said in his budget briefing.

Treasurer Jim Chalmers’s “fragile global conditions” balls in the air included cost-of-living relief, industrial policy with the Future Made in Australia project, fiscal repair and debt stabilisation and constraints from the Reserve Bank’s interest rate hikes.

“Of course, there were even more than this short list, but that’s more than enough juggling to be going on with,” said Thirlwell

Plenty of carrots in the budget, including electricity bill relief, child care subsidies and a paid parental leave scheme.

And the previously announced adjustments to the stage three tax cuts, giving more to those with middle and lower incomes.

Commsec chief economist Stephen Halmarick said the 2023-24 federal budget improves the government’s deficit and debt profile in a time of slowing economic growth and moderating inflation.

“It delivers targeted funding to support Australians experiencing cost of living pressures and helps to progress the Government’s policy agenda,” Halmarick said. 

“As economic growth slows in the year ahead, the budget may see some benefit from a larger workforce.”

Deloitte says the budget shows a surplus for the 2023-24 financial year, before returning to deficit in 2024-25 and beyond.

"Although a surplus of $9.3 billion in 2023-24 is now expected – revised up from a $1.1 billion deficit forecast just six months ago – the budget bottom line is forecast to be a cumulative $13.9 billion worse off over the four years to 2026–27."

Deloitte said the budget centred on providing cost-of-living relief and investing in the Future Made in Australia Act to support medium-term economic growth.

"The result is a relatively large increase in government spending over the next four years, potentially putting further upward pressure on inflation," said Deloitte.


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