The Mid Year Economic and Fiscal Outlook (MYEFO) 15 December 2015
The Hon Scott Morrison, Treasurer of Australia announced and released the government's MYEFO 15 December 2015.
As Mr Gittins (see link) of the Sydney Morning Herald comments:
"The outlook for the deficit has deteriorated mainly because it's now likely the economy won't be growing as strongly as expected at budget time, because some key export prices have fallen by more than expected and because wages have increased more slowly than expected. Scott Morrison announced some housekeeping measures which, he says, will be sufficient to fully cover the cost of the government's new spending measures since the budget, including last week's innovation package."
So perhaps it is "move along, nothing to see here"? However if you look a bit closer the package of measures they amount to announcements of intended Budget actions or initiatives announced now, to start savings now, in a politically sensitive year (elections are coming up) so no major and divisive cuts were announced but more budget by stealth; watch this space.
Main points are:
- The budget 'bottom line' has deteriorated by around $3 billion since May, swelling the 2015-16 deficit to about $37.4 billion,
- Some commentators have said this is the biggest collapse in terms of trade since records were started in the 1950s,
- Treasurer Scott Morrison said those measures as well as "other pressures" had pushed spending for this financial year to 26.2 per cent of GDP,
- Reduction in iron ore prices and a cut in growth forecasts have helped wiped out $34bn in tax revenue forecast as recently as the May budget,
- Commonwealth on track for deeper deficits and higher debt,
- Real GDP is forecast to fall from 2.75 per cent forecast in the budget to 2.5 per cent for 2015-16, and fall from 3.25 per cent to 2.75 per cent for 2016-17
- In total, deficits over the next four years are now expected to be about $26 billion bigger than thought at budget time in May 2015,
- One area of good news: unemployment is down .5%
- Return to budget balance has been pushed back by a year to 2020-21, when payments from the Future Fund begin.
Initiatives:
Spending decreases/cuts:
- The leading savings measure is a data matching system via a compliance program, saving $1.3bn over four years by using data matching to find discrepancies,
matching Australian Taxation Office income records with Centrelink's income records to reduce over claiming of benefits,
- In the education portfolio, policy will cut outlays by $995m over four years,
- The social services portfolio will see the biggest cuts, with savings of $1.9bn over four years,
- Green Army initiative will be capped by limiting people in it will save $359m over four years,
- Dozens of measures in healthcare will “streamline” services to save money,
but all policy decisions in the health portfolio will increase spending by $659m over four years,
Spending cuts involve $704 million from higher welfare payment compliance,
$639 million for changes to pathology, diagnostic imaging,
$595 million for reduced funding to health workforce programs,
$472 million for changes to aged care funding, and
$441 million for changes to child care system that reduce child care subsidies on families with more than $250,000 a year,
$930m will be drawn back from family day care,
Main spending increases:
$1.1 billion for roads,
$909 million for 12,000 Syrian refugees,
$621 million for PBS changes,
$500 million for asylum seekers, and
$459 million for innovation.
Sources:
http://www.budget.gov.au/
http://www.budget.gov.au/2015-16/content/myefo/html/index.htm
http://www.smh.com.au/federal-politics/political-opinion/myefo-budget-update-fails-to-map-out-a-road-to-surplus-20151215-glo3ty.html
http://www.smh.com.au/business/the-economy/myefo-budget-update-treasury-calls-it--housing-boom-over-20151215-glo334.html
http://www.afr.com/news/economy/spending-iron-ore-rout-blows-budget-deficit-to-38b-20151213-glmdir
http://www.abc.net.au/news/2015-12-14/treasurer-morrison-to-take-out-trash-in-myefo/7025432
If you have any comments or questions please let me know.
Brett Lamond & Co
15 December 2015
[20151215]
Last Edit 15 December 2015
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As Mr Gittins (see link) of the Sydney Morning Herald comments:
"The outlook for the deficit has deteriorated mainly because it's now likely the economy won't be growing as strongly as expected at budget time, because some key export prices have fallen by more than expected and because wages have increased more slowly than expected. Scott Morrison announced some housekeeping measures which, he says, will be sufficient to fully cover the cost of the government's new spending measures since the budget, including last week's innovation package."
So perhaps it is "move along, nothing to see here"? However if you look a bit closer the package of measures they amount to announcements of intended Budget actions or initiatives announced now, to start savings now, in a politically sensitive year (elections are coming up) so no major and divisive cuts were announced but more budget by stealth; watch this space.
Main points are:
- The budget 'bottom line' has deteriorated by around $3 billion since May, swelling the 2015-16 deficit to about $37.4 billion,
- Some commentators have said this is the biggest collapse in terms of trade since records were started in the 1950s,
- Treasurer Scott Morrison said those measures as well as "other pressures" had pushed spending for this financial year to 26.2 per cent of GDP,
- Reduction in iron ore prices and a cut in growth forecasts have helped wiped out $34bn in tax revenue forecast as recently as the May budget,
- Commonwealth on track for deeper deficits and higher debt,
- Real GDP is forecast to fall from 2.75 per cent forecast in the budget to 2.5 per cent for 2015-16, and fall from 3.25 per cent to 2.75 per cent for 2016-17
- In total, deficits over the next four years are now expected to be about $26 billion bigger than thought at budget time in May 2015,
- One area of good news: unemployment is down .5%
- Return to budget balance has been pushed back by a year to 2020-21, when payments from the Future Fund begin.
Initiatives:
Spending decreases/cuts:
- The leading savings measure is a data matching system via a compliance program, saving $1.3bn over four years by using data matching to find discrepancies,
matching Australian Taxation Office income records with Centrelink's income records to reduce over claiming of benefits,
- In the education portfolio, policy will cut outlays by $995m over four years,
- The social services portfolio will see the biggest cuts, with savings of $1.9bn over four years,
- Green Army initiative will be capped by limiting people in it will save $359m over four years,
- Dozens of measures in healthcare will “streamline” services to save money,
but all policy decisions in the health portfolio will increase spending by $659m over four years,
Spending cuts involve $704 million from higher welfare payment compliance,
$639 million for changes to pathology, diagnostic imaging,
$595 million for reduced funding to health workforce programs,
$472 million for changes to aged care funding, and
$441 million for changes to child care system that reduce child care subsidies on families with more than $250,000 a year,
$930m will be drawn back from family day care,
Main spending increases:
$1.1 billion for roads,
$909 million for 12,000 Syrian refugees,
$621 million for PBS changes,
$500 million for asylum seekers, and
$459 million for innovation.
Sources:
http://www.budget.gov.au/
http://www.budget.gov.au/2015-16/content/myefo/html/index.htm
http://www.smh.com.au/federal-politics/political-opinion/myefo-budget-update-fails-to-map-out-a-road-to-surplus-20151215-glo3ty.html
http://www.smh.com.au/business/the-economy/myefo-budget-update-treasury-calls-it--housing-boom-over-20151215-glo334.html
http://www.afr.com/news/economy/spending-iron-ore-rout-blows-budget-deficit-to-38b-20151213-glmdir
http://www.abc.net.au/news/2015-12-14/treasurer-morrison-to-take-out-trash-in-myefo/7025432
If you have any comments or questions please let me know.
Brett Lamond & Co
15 December 2015
[20151215]
Last Edit 15 December 2015
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