what we know so far

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<p><figcaption class=Director of photography: Mick Tsikas / AAP

Treasurer Jim Chalmers will deliver the first Labor budget in nearly a decade on Tuesday, in what he reported as a “solid, simple and sane” project for the times.

The budget comes at a time of growing international economic turmoil and fears of a widespread global slowdown, along with growing domestic pressures that are hitting household budgets hard.

Although the bottom line of the budget is improving from previous forecasts, spending pressures remain and Chalmers signaled that this budget will be the start of a national conversation on future fiscal challenges.

The budget will also be an important indicator for the Albanian government five months after the elections, clarifying its priorities and direction for this term and beyond.

So what do we know so far?

The economy

With families tightening the purse strings amid mounting pressures on the cost of living, Tuesday’s budget will show a slowdown in economic growth. Australia’s gross domestic product is now expected to grow 3.25% this financial year, before plummeting to 1.5% in 2023-24. In the March budget, the forecast was for GDP growth of 3.5% this year and 2.5% next year.

Related: Housing, indigenous and domestic violence services will receive $ 560 million more in the federal budget

Inflation will also be revised upwards for 2023-24, moving from a previous forecast of 2.75% to 3.5% for 2023-24. For the current year, inflation will be almost double compared to what was forecast in March, going from 3% to 5.75%.

Wage growth is not expected to exceed inflation until the following year, while unemployment will be revised up from 3.75 to 4.5%.

International growth data will also be downgraded, with a slowdown now expected in China, the US and the UK, and the balance sheet data will reflect a sharp contraction in these major economies.

The bottom line

With the Covid economic shock now in the rearview mirror and the economy benefiting from the surge in commodity prices, the budget is expected to reflect improved profits in the near term.

Recently released data for the final budget result for 2021-22 showed a $ 48 billion improvement in the deficit to $ 32 billion.

Deficits will also be revised down for next year, but Chalmers warned that spending pressures continue to build and a structural deficit is expected to remain over the next decade. He has watered down the expectations of being able to provide a surplus at any time.

Debt also continues to grow, standing at $ 892.3 billion as of October 14th.

Expense

The first budget of the Albanian government will also take into account the commitments made in view of the elections, along with a series of new commitments.

A cheaper child care package, costing $ 5.4 billion over anticipated estimates, was the largest of these, with the reform taking effect in July next year.

Other major electoral commitments include aged care reforms costing $ 2.5 billion, the cheapest drug policy at $ 770 million, extra college seats costing $ 485.5 million, 220 million dollars for Medicare strengthening and $ 54.3 million for electric vehicle discount policy.

The budget will also detail a $ 9.6 billion infrastructure package, mostly announced ahead of the election, including $ 500 million for the NSW High Speed ​​Rail Authority, $ 2.2 billion for the rail link. suburban in Victoria, $ 1.5 billion for freight highways and more than $ 1 billion for roads in Queensland and Tasmania.

The budget will also allocate an additional $ 560 million for community organizations, including housing, domestic and indigenous violence services, to help cope with rising inflation.

Other significant costs to reflect in the budget include the cost of servicing the public debt, which is expected to grow by 14% annually, while spending on NDIS will grow by 12.1%, health by 6.1% and defense by 4. , 4%.

The government has also identified another $ 6.4 billion in unfunded programs and so-called “zombie” savings measures that it will have to account for in Tuesday’s budget.

An increase in foreign aid was also included in the budget, with an increase of $ 900 million for Official Development Assistance (ODA) for the Pacific and an increase of $ 470 million for aid for Southeast Asia. .

Savings

As part of a line-by-line check of previous spending commitments, the government has identified $ 10 billion in savings that will result from cutting various projects promised by the previous government.

The budget will also cut $ 2 billion in discretionary funding and include a $ 6.5 billion “re-profiling” of infrastructure projects to prioritize its commitments.

Savings of $ 3 billion were achieved through a commitment to reduce spending on public services for contractors, consultants and labor rental companies, and an additional $ 570 million for reducing advertising, travel and legal.

Tax

After testing the waters on potential changes to phase three tax cuts, Chalmers ruled out making changes to this year’s budget, despite the cost of the measure rising to $ 254 billion over a decade.

However, the budget will include plans to ensure multinationals pay more taxes, with the move to raise $ 1.9 billion over four years from 2023 to 24.

It also expects a $ 3 billion improvement in profits by recouping extra revenue through extending and enhancing existing tax compliance programs.

Related: Labor “rorts and waste” audit to provide $ 10 billion in savings to the federal budget

Measures of well-being

For the first time, the budget will include a chapter focusing on non-economic indicators that reflect the country’s “well-being”, following in the footsteps of the New Zealand Labor government.

Chalmers reported that the budget will begin tracking things like education levels, health standards and the state of the environment as a way to measure the nation’s “well-being” that is not otherwise reflected in budget documents.

Tuesday’s budget will lay the foundations for the new approach.

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