Josh Frydenberg’s March 29 budget — his fourth as Treasurer — is expected to reveal a big deficit for 2022-23. In December, it was estimated it would be just under $99 billion, but the updated figure is expected to have tumbled by tens of billions of dollars. That said, we still have a structural deficit of close to $1 trillion dollars, and the costs of that debt will rise, as interest rates rise, so that’s a problem. And the structural deficit will continue, that’s to large spending on programmes like NDIS, Centrelink Payments, Medicare, and Defence.
And although the current year deficit will fall from $99 billion as predicted, it is worth remembering that to date the Government has promised to spend some additional $70 billion over a number of years on a range of programmes, some with frankly dodgy motivations (some might think pork-barrelling was a better term).
There will be some short-term relief, to assist with the cost-of living pressures, which according to recent surveys are driving household confidence lower. But the whole exercise is political.
The Government will of course go on talking about the $250 billion savings households are sitting on, thanks to COVID and Government payments over the past couple of years, but as I have shown before this is not equally spread across the population and taking in general terms about “household balance sheets are in good shape” belays the truth that averages mask, and many households are really up against it as costs of living rise, and with the prospect of higher interest rates ahead.
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