Future generations will be paying back Australia’s massive debt for a very long time after this budget.
It was just three years ago that Treasurer Josh Frydenberg declared that the nation was back in black, announcing the Coalition would hand down a $7.1bn surplus for the 2019-20 financial year.
But then Covid happened.
Gross debt is now forecast to pass $1 trillion in 2023-24 and hit $1.17 trillion in 2025-26, with net debt at $864.7bn.
And although a whopping $8.9bn in cost of living measures announced on Tuesday will provide much needed relief through cash payments and fuel costs, it hasn’t helped that situation.
Mr Frydenberg said that budget would be repaired without increasing taxes, with low unemployment rates increasing the amount of revenue coming through.
“The deficit for 2022‑23 is expected to be $78 billion or 3.4 per cent of GDP,” he said.xjmtzyw
“Over the next three years, this will more than halve to 1.6 per cent.
“Net debt as a share of the economy will peak at 33.1 per cent at 30 June 2026.
“Significantly lower than forecast last year.
“We have drawn clear lines … banking the dividend of a stronger economy.”
But the Committee for Economic Development of Australia has said that the budget relies on short-term fixes while missing the opportunity to solve things in the long-term.
“The budget has only taken modest steps to permanently lift the capacity of households to navigate the growing pressures on the economy,” Chief Economist Jarrod Ball said.
“The $8.6bn of cost-of-living measures mostly benefit income earners and motorists, with many income support recipients receiving the least relief from cost-of-living pressures.
“With growing inflationary pressures and interest rate rises on the horizon, cost-of-living pressures will not dissipate any time soon and these measures do not provide a long-term solution.
“Better living standards for all Australians and insulating the economy and budget from global shocks requires stronger productivity growth.
“Temporary relief measures have been underwritten by the fiscal dividends of a commodities boom and better-than-expected economic recovery since the mid-year update, but future growth will not be this strong absent a major lift in productivity.”
