Australia Big spending likely from improved budget

00:16  06 may  2021
00:16  06 may  2021 Source:   aap.com.au

NT's budget likely to reveal soaring debt

  NT's budget likely to reveal soaring debt The Northern Territory budget is expected to reveal net debt has ballooned to more than $10 billion amid expenditure restraint.The Top End's net debt was forecast in November to reach a record $8.4 billion this financial year - equivalent to 132 per cent of revenue.

Admitting ambitious federal spending proposals could impact the economy, Treasury Secretary Janet Yellen said benchmark interest rates may need to go up to avoid overheating. Even before Yellen’s comments, some economists suggested government spending , coupled with supply chain bottlenecks, could trigger an inflation problem, and in turn, push the Fed to raise interest rates sooner than expected. The economy this year has surged, benefiting from the rollout of COVID-19 vaccines as well as a massive infusion of government aid.

Increased government spending is likely to cause a rise in aggregate demand (AD). This can lead to higher growth in the short-term. Pension spending – An ageing population, requires higher government spending , – pensions and health care spending . But pension spending has no impact on boosting productivity. Education and training – If successfully targetted on improving skills and education, government spending can increase labour productivity and enable higher long-term economic growth.

Will May 11 bring a budget that aims to extend Australia's remarkable economic recovery or one targeted at ensuring the coalition is returned to power at the next election?

Josh Frydenberg wearing a suit and tie: Josh Frydenberg is expected to fuel Australia's economic recovery with further big spending. © Lukas Coch/AAP PHOTOS Josh Frydenberg is expected to fuel Australia's economic recovery with further big spending.

Josh Frydenberg recently scolded a senior journalist for mentioning the election in the context of the budget, calling it "cynical".

Whatever the case, announcements and leaks so far suggest the treasurer will be spending big - aged care, childcare, tax and infrastructure being just some of the areas the budget will touch.

Promises, promises. Josh Frydenberg made a lot in last year’s budget, but did they stack up?

  Promises, promises. Josh Frydenberg made a lot in last year’s budget, but did they stack up? There were a few fails — JobMaker, women — but by getting the iron ore price wrong, the treasurer gained many billions for his coffers.But seven months later, many of Frydenberg’s signature splashes — wage subsidies and women’s economic security — have failed to have a big impact. And it’s unlikely many of the big assumptions underpinning that budget’s optimistic projections will play out.

Big - budget advertisers know that if you have multiple ads and multiple offers, you need multiple landing pages too. That’s because your prospects will respond much better to specific, tailored messaging that matches the ad they clicked very closely. If you’re sending all your traffic to one generic landing page (or worse, your home page!) they’re going to get confused and bounce. Provided you’re tracking conversions, it’s likely that either… A lack of negative keywords is causing a deluge of superfluous impressions, many of which are stealing budget away from those interested in your offer.

A budget deficit is when spending exceeds income. To reduce it, you must increase income or lower spending , whether you're a family or a government. Most governments prefer to finance their deficits instead of balancing the budget . Government bonds finance the deficit. Most creditors think that the government is highly likely to repay its creditors. That makes government bonds more attractive than riskier corporate bonds.

"The budget will lay out the next phase of Australia's economic recovery plan, to grow our economy so we can deliver the jobs and guarantee the essential services Australians rely on, and keep Australians safe," Mr Frydenberg says.

"We want more people in jobs and in better paying jobs."

Spending won't be to the same degree as October's crisis budget, when the government was trying to protect workers and business from the COVID-19 pandemic and the first recession in nearly three decades.

Yet, the strong economic rebound has put the budget in a far better position than expected just a few months ago, providing the government with room to fund further targeted support without going deeper into debt.

Economists believe the 2020/21 deficit could now be closer to $150 billion rather than the $197.7 billion estimated in the mid-year budget review - itself a revision from the record $213.7 billion announced in the October budget.

What's in the budget? Here are the key measures we already know about

  What's in the budget? Here are the key measures we already know about The federal budget will have measures for retirees, single parents, and first home buyers. What about you?Pre-budget leaks are a well-established tradition, and this year has been no exception.

“Nonetheless, there are more likely to be tax sweeteners for voters, specifically private tax charge cuts for center revenue earners, with greater than 10 million Aussies incomes below 0,000 attributable to face a tax hike from subsequent monetary 12 months. “The Authorities can be trying to spend cash on the insurance policies that may assist them win on the polls in 2022.” What we already know about the 2021-22 federal budget . Financial savings for working Aussie households.

RM: That is a big emergency package to be announcing in a budget , signalling the government is taking the threat of the coronavirus to the economy extremely seriously. The action is commensurate with a Treasury preparing for the possibility of a recession. RM: Sunak is paving the way to ditch the fiscal rules of his predecessor, announcing a review of the framework that is likely to conclude he should be allowed to borrow and spend more. That should be chalked up as a victory for those in No 10, such as Dominic Cummings, who wanted looser constraints to allow for spending on new Tory

And this is not just a wild stab in the dark.

The government's monthly financial statement for March showed the budget deficit was running almost $30 billion smaller than predicted after nine months of the financial year.

Video: Demand for regional workers surpasses mining boom demand (ABC NEWS)

Likewise, economists expect the deficit for 2021/22 could now be around $60 billion rather than $108.5 billion.

As confessed budget nerd Chris Richardson puts it, Australia's "red hot" recovery is helping the budget get better.

The Deloitte Access Economics economist says this is the result of jobs recovering faster than Treasury assumed, soaring iron ore prices and households' willingness to spend.

Treasury will be making major revisions to its forecasts after Australia posted its strongest growth in six months on record in the second half of 2020, as the economy snapped back from recession.

Federal Budget 2021: Winners and Losers

  Federal Budget 2021: Winners and Losers A cash boost for women's health and safety, money to improve aged care, but renewables get left behind — who's got what in this year's budget.An extra $1.9 billion will be spent on our vaccine strategy over the next five years, with the government also confirming it's set aside a pool of money to invest in mRNA vaccine production in Australia.

Even that is likely to prove optimistic. On March 17th analysts at Goldman Sachs noted that they had “not yet built a full lockdown scenario” into their forecasts for advanced economies outside Europe. Forecasts for America, which is at an earlier stage than Europe and Asia when it comes to the outbreak, remain Panglossian; very slow growth in China and a big recession in Europe could by Governments are falling over each other to offer bigger and better stimulus packages. All countries are spending more on health care, both in an effort to find vaccines and cures and to increase hospital capacity.

Bad spending habits — most of us have at least a few. In fact, that’s likely why one of the top 2018 New Year’s resolutions is to spend less and save more. “Buying cheap products can cause major leaks in your budget because you may need to constantly replace these items and actually spend more in the long run,” said money-saving expert Andrea Woroch. Spending a little more on some items actually can pay off — especially those things you want to last for a while such as shoes, outerwear, linens and cookware.

Notably, the unemployment rate had steadily dropped to 5.6 per cent by March when Treasury had predicted it would be 7.5 per cent at this stage of the year.

Such has been the jobs recovery, the treasurer is now aiming for a jobless rate of below five per cent before the process of budget repair begins, rather than six per cent as previously targeted.

Economists believe the jobless rate could be as low as five per cent by the end of the year given the strength of demand for workers, as suggested by forward-looking indicators like job advertising.

One budget forecast that bore no relation to reality was for iron ore, one key guide to national income.

Rather that $US55 per tonne as predicted in December, the red metal struck a record of just over $US190 per tonne, buoyed by ongoing demand from China despite trade frictions between the two countries over other commodities.

It means tens of billions of dollars of additional revenue.

Mr Frydenberg loves to point out - as have other previous Liberal treasurers - his conservative approach to commodity prices, unlike Labor which over estimated them to the detriment of the budget.

Not that the budget should be seen in the light of the next election.

Federal budget under fire on Q+A as Jim Chalmers talks slush funds and Jacqui Lambie takes aim over national debt .
Shadow Treasurer Jim Chalmers accuses the government of using slush funds in the budget as independent senator Jacqui Lambie calls out the government for leaving future generations with a trillion dollars worth of debt.On Thursday night, Minister for Superannuation, Financial Services and Digital Economy Jane Hume was left to fend off criticisms of the government, which came especially vigorously from Independent Senator Jacqui Lambie and Shadow Treasurer Jim Chalmers.

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