CCIWA Chief Economist
Australia’s Federal Budget will be in surplus for the first time in 15 years, and national debt has been significantly revised down. A key driver of the turnaround was a $51.8 billion surge in corporate tax paid by business, a reminder that the business community is vital to Australia’s fortunes. CCIWA commends the Government for committing much of the revenue windfall to reduce debt, instead of increasing the structural deficit.
This strong outcome will recede as cost pressures take over. Although improved, our gross debt will still reach $1.1 trillion and does not peak within the next four years. Demands for spending increase 10.4% per year for the national disability insurance scheme, 6.5% per year for hospitals, 6.1% for aged care and 6.4% for defence, putting us back in the red. Strained by costs and inflation, our economic growth will drop to a disappointing 1.5% next year.
Against this backdrop, it is becoming more difficult for future mining, energy and resources projects to get off the ground, with prolonged approvals processes, price caps, tax changes and regulatory interventions. Wholesale shifts to our workplace relations laws, including the introduction of multi-employer bargaining and the mooted ‘same-job same-pay provisions’, also loom as a significant drag on our economy.
To return to a sustained surplus in future, we should build on our strengths, through further initiatives to facilitate critical investment, including by moving with the world and supporting carbon capture and storage, introducing productivity-enhancing reforms, and reforming environmental approvals.