Australia faces a growing budget deficit over the next four years due to rising spending and a surge in migration. The government acknowledges the need for tax reform, while Philip highlights concerns about the private sector's weakness and China's economic slowdown.
The budget is expected to slip deeper into deficit over the next four years, as better than expected revenues are outweighed by growing spending pressures. Australia's structural budget deficit is the result of years of successive governments neglecting the economic and tax reform needed to create a more prosperous Australia, said Philip.
Philip acknowledges the government is faced with spending challenges like defence, energy and housing, but said tax reform, that would rely more heavily on drawing taxes from somewhere other than personal income tax, would help. From his POV, some other interesting insights from the MYEFO papers include: government spending and migration are propping up the economy, the private sector is 'incredibly weak' and China's slowdown is affecting Australia's economy.Australia's migrant population will rise above the government's expectations by 80,000 people over this financial year, adding to pressure on Australia's housing and rental markets. To give you an idea, that's about an extra city the size of Rockhampton in QLD or Coffs Harbour in NSW's worth of people. Net migration figures bounce around and since the COVID pandemic have consistently been above estimates provided at budget time. But that has fuelled the debate on migration, which has become the key lever to reduce pressures on housing and rentals in the short-term. Overall the government now expects net migration to grow by 340,000 people this financial year, which is above the long term average but is less than the 446,000 net arrivals last financial year.It's coming down slower than was anticipated in the budget really for one reason, and that's because there have been fewer departures, said Chalmers.The treasurer has been noting that the government has saved 82 per cent of its budgetary luck, he wrote on X. But the election approacheth … In today’s MYEFO, new policy decisions have been costed at a further $17.5bn, which is 93 per cent of the revenue write-up of $18.
BUDGET DEFICIT TAX REFORM MIGRATION ECONOMY CHINA SLOWDOWN
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