Just what does this Budget mean for people with disability? We’ll be dissecting it over the coming weeks in an attempt to find out . . .
The first reaction to the budget should be surprise. Why? Here’s the Guardian‘s Greg Jerico:
“Since the dark days of the pandemic and the 2020-21 budget, the government has found itself with about $270bn extra revenue from 2020-21 to 2024-25 than was initially expected. Rather astonishingly, the Treasury now expects $133.5bn more tax revenue over the five years from this financial year out to 2025-26 than it did just three months ago in December’s mid-year economic and fiscal outlook. And so, rather than a $106.6bn deficit this financial year – as was expected last year – the government now expects the deficit to be a “mere” $79.8bn.”
That’s the good news. In The Conversation Peter Martin explains what this means for interest repayments:
“A year ago, net debt was expected to peak at 40.9% of GDP in mid-2025 before sliding as the economy grew. Now it is expected to peak earlier at 33.1% of GDP. Net interest payments are expected to peak at a very small 0.9% of GDP in 2025-26 before slipping to 0.8% of GDP. And there are reasons to think things will turn out better than forecast. Unemployment, now down to 4%, is expected to fall only a little further to 3.75% within months and then stay there before climbing back to 4% in 2026. But that’s because treasury has assumed unemployment can’t stay as low as 3.75% without sparking inflation – an assumption it concedes might be wrong, noting Australia has “limited recent experience” of an unemployment rate lower than 5%..”
So what’s the problem with that? Well, here’s Martin again:
“In the budget fine print (page 60 of Statement 1) treasury concedes it’s none too sure about its forecast of wages growth we haven’t seen in a decade. It shares an alternative forecast that uses different assumptions to produce annual wages growth no higher than 2.5% – below inflation for a further two years.”
Now if Treasury itself isn’t really sure about wages growth and we also know it’s already been (quite significantly) wrong about the deficit, how can we trust its projections in this document? Answer – we probably can’t.
There’s nothing wrong with that and it’s actually marvellous that the Department has owned up to the problem it has in predicting the future accurately, particularly in the current economic climate. The issue is, rather, that forecasts always contain a bit of guesswork in them and these probably have a bit more than normal. That being the case there can be some suspicion that – especially as this is a pre-election budget – these figures will almost certainly change before the year is out.