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4 May 2016
AUD: Budget has a political as well as economic dimension - NAB
Research Team at NAB, suggests that the Australian Budget clearly has a political as well as economic dimension – and in particular is framed against the assumption of an upcoming election.
Key Quotes
“As such it is really an exercise in selected refocusing outlays and receipts to achieve the Governments focus of “growth and jobs” – but achieved within a realpolitik framework of burden sharing and keeping debt at sustainable (AAA) levels. The current environment means there is little scope for large structural reforms. And with a Budget not likely to get back to surplus by 2020/21 – and then only marginally – it clearly remains vulnerable to the vagaries of the economic cycle.
Of course the Budget may not be the final word on medium term fiscal sustainability given the forthcoming election campaign. Our bottom line is there is not a lot of scope for pulling further “rabbits from the hat”. And that Budget repair will be a long and difficult “slog” given the economic environment. We are more cautious in 2018/19 forecasts.”
Key Quotes
“As such it is really an exercise in selected refocusing outlays and receipts to achieve the Governments focus of “growth and jobs” – but achieved within a realpolitik framework of burden sharing and keeping debt at sustainable (AAA) levels. The current environment means there is little scope for large structural reforms. And with a Budget not likely to get back to surplus by 2020/21 – and then only marginally – it clearly remains vulnerable to the vagaries of the economic cycle.
Of course the Budget may not be the final word on medium term fiscal sustainability given the forthcoming election campaign. Our bottom line is there is not a lot of scope for pulling further “rabbits from the hat”. And that Budget repair will be a long and difficult “slog” given the economic environment. We are more cautious in 2018/19 forecasts.”