Australia’s budget is $ 45 billion better, but long-term pain is expected: Deloitte

Deloitte Access Economics forecasts that the budget deficit for the next four years will be $ 45 billion ($ 33.4 billion) less than the Treasury’s forecast, but the long-term budget outlook is $ 60 billion ($ 44 billion). ) It gets worse.

Deloitte partner Chris Richardson said Australian taxpayers will put $ 45 billion back in their pockets as a result of the pre-Delta healthy economy and the tightening of the budget used to handle Delta’s outbreaks. Stated.

“We have been saying for some time that the better our economy, the better our budget.” Richardson said.. “Therefore, the recovery of the pre-delta deficit has naturally reduced the deficit from a record $ 204 billion for the year to February 2021 to $ 101 billion for the year to August 2021. . “

The May budget revealed that last year’s fiscal year revenues were $ 20 billion above official estimates.

The cost of delta outbreaks was also lower than last year, and the federal government demanded that the state bear a more important part of the burden.

Treasury Minister Josh Frydenberg said the report showed that the federal economic program was working.

“Our economic plan is working,” Frydenberg said. Told AAP.. “As we recover from the biggest economic shock since the Great Depression, tax cuts and investment in skills and infrastructure will continue to support the economy.”

Epoch Times Photo
Federal Finance Minister Josh Frydenberg before giving a budget speech at the National Press Club in Canberra, Australia on October 7, 2020.
(Sam Mooy / Getty Images)

Richardson said the cost of debt has actually fallen due to lower interest rates, despite rising debt levels.

“Debt has increased, but interest rates have fallen. The latter has the dual benefit of being applied not only to new debt, but also to the rollover of existing debt,” he said. “And what’s the net impact? We expect net interest payments from 2024 to 25 to be $ 30 million less than the budgeted Treasury.”

But the problem is long-term and is expected to open a $ 60 billion budget hole. This is about the same as the dissolution of the Australian Defense Force, in addition to cutting federal spending in half.

“The cost of COVID-19 is a temporary cost, but the real risk to the budget is always a permanent cost shift,” says Richardson. “Sadly, life has become more expensive while we are looking elsewhere.”

Deloitte also said Australia needs to “catch up” with social spending and expects more costs for elderly care, disability and mental health. For example, there is a large gap between the projected and actual costs of the national disability insurance system.

Defense spending is also expected to increase as budget estimates do not include costs like trading new nuclear submarines.

Australia is also far behind the pre-COVID-19 labor forecast, with borders closed for nearly 600 days.

“To be clear, that’s not the $ 60 billion hole we should try to fill quickly. Doing so would still be very damaging to the fragile economy,” Richardson said. “But the federal elections are imminent. We must not let either side pass the campaign by pretending that there are no difficult decisions to get going.”

Rebecca Chu