On Tuesday, 9 May 2017, Treasurer Scott Morrison handed down the 2017-18 federal budget, his second budget.
In his budget speech, the Treasurer reported an underlying cash balance deficit of $29.4 billion for 2017-18. However, this outcome is projected to improve to $7.4 billion surplus by 2020-21. The budget expects the economy to rebound and grow at 2.75 per cent in 2017-18 and 3 per cent in 2018-19, supported by growth in household consumption, exports and a transition to non-mining business investment.
Forecast tax receipts for 2017-18 have been revised up by $6.4 billion over the forward estimates to 2019-20 due to new policy measures, including an increase in the Medicare levy, introducing a major bank levy, improving the integrity of GST on property transactions and a Skilling Australians Fund levy. These policy measures are expected to raise $11.9 billion over the forward estimates.
While tax receipts have been affected by downward revisions to the outlook for wages, an upgrade to the outlook for profits is expected to see higher taxes for companies to more than offset the lower tax receipts expected from individuals.
Reflecting this economic optimism, the government has committed over $70 billion from 2013-14 to 2020-21 to transport infrastructure across Australia, using a combination of grant funding, loans and equity investments. To ensure that each dollar of funding (so-called “good debt”) for infrastructure goes further to enable more projects, the government will look to identify ways to deliver infrastructure through more innovative financing methods.
In the week leading up to the budget, the Treasurer said that the government was very cognisant of the frustration about rising costs of living, especially when wages were tight. While Mr Morrison said it was important to put downward pressure on rising costs of living, no government can solve that.
He said governments “have to take the actions they can take to put downward pressure on those rising costs of living”. In this area, the government has to also put forward a comprehensive plan on housing affordability, including initiatives for first home buyers.
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