Surplus taking a hit as wages and drought hit bottom line | swrighteconomy
Slow wage growth will help punch an $8.1 billion hole in the Morrison government's budget surplus plan, one of the nation's leading forecasters has predicted amid signs the economy remains subdued in the run-up to Christmas.
Deloitte Access believes Josh Frydenberg is still on track to deliver the first budget surplus in more than a decade but slow wages growth is making it more difficult.But Deloitte believes slower than expected wages growth is starting to bite into federal revenues.It has written down income tax collections by almost $3 billion for the year and by a total of $15 billion over the forward estimates.
"Our bottom line sees revenues losing momentum, thereby narrowing the gap between what's happening in the economy and what's happening in the budget. The lucky country's most recent run of luck helped the budget but that was never for ever," he said. Deloitte Access Economics director Chris Richardson says the luck that has run the way of Australia and the budget is starting to disappear.Mr Richardson said GST collections are also expected to be downgraded, tipping a shortfall of $1.4 billion this year and $2.3 billion in 2020-21. But as GST is passed through to the states and territories this won't have a direct impact on the federal budget.
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