Scomo is channelling his inner AC/DC with the ‘Back in Black’ budget, however the government doesn’t want you to think that they are a rebellious when it comes to the economy.  The government’s desire is to assure you that they are the best choice for managing the economy and the nations finances.  The budget is very short term and is directly pointing at the election in May. 

The problem with this budget, is that the election may result in these proposals not being passed.  The budget reply on Thursday night will be just as important, as this may be our ‘Plan B’ if Labour comes into power.   It will definitely be followed more closely than in non-election years.

The budget reply on Thursday night will be just as important, as this may be our ‘Plan B’ if Labour comes into power.   It will definitely be followed more closely than in non-election years.

The headline for this budget is the surplus of $7.1 billion in 2019-20 and a commitment to delivering budget surpluses from then onwards.  The problem that both governments need to address is that surpluses will only be sustained if the misalignment between revenue and expenditure is repaired. 

Budget repair is not popular with voters, so it hasn’t really been addressed in this budget.  The Government is aiming for business growth by fast-tracking their lower company tax rates and increasing the instant asset write off. 

The economy is forecast to accelerate from 2.25% in 2019 to 2.75% growth in 2020 and 2021. Employment growth will ease from 2% to 1.75% over the same periods. Unemployment is expected to remain the same at 5%. They do expect wages growth to increase as move inflation into the RBA target range of 2-3%.

The success of this budget will ultimately sit in the hands of voters and whether the Government can win the confidence of the Australian people. The voters need to also consider prior announcements from Labour about their proposed tax changes (of which there have been quite a few) and what they will announce in Thursday’s budget reply.

Read our other articles on the impact of the new Federal Budget on Businesses, Super, and for individuals. If you have any queries on this, please don't hesitate to contact us.