âTabooâ broken: RBA is funding the budget deficit
Canberra and Martin Place are working very closely together. It would be better if there was more transparency in the relationship.
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The big-spending federal budget will be a factor for the Reserve Bank of Australia as it considers the next phase of its government bond buying program.
On the one hand, the government is doing more debt-financed stimulus than previously anticipated, so there is an argument that the RBA could gradually take its foot off the pedal and taper its $200 billion quantitative easing program after September.
A plaque at the RBAâs headquarters in Sydney. How far does the bankâs remit go?Â
Libs excise fiscal rectitude from their political arsenal
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May 15, 2021 â 5.30am
May 15, 2021 â 5.30am
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An economist who once worked for the federal Treasury, Stephen Anthony, describes the Morrison governmentâs federal budget this week as âa requiemâ. But whose funeral is it?
Responsible government financial management, for starters. The Liberals who contemptuously dismiss this budget as âWhitlamesqueâ do Gough a grave injustice. As a proportion of the economy, the debt and deficit in this Josh Frydenberg budget is vastly bigger than anything Whitlam committed.
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Home » News & events » All stories » Frydenberg spends the budget bounty to drive unemployment down to new lows
Frydenberg spends the budget bounty to drive unemployment down to new lows 12 May 2021
Never before has a budget spent so much to supercharge the economy after the worst of a recession has already passed.
The economy bounced back from last year’s COVID recession far more sharply than the treasury (or just about anyone else) expected.
The bounty from the higher-than-expected tax collections that flowed from more people than expected in work, a much higher-than-expected iron ore price, and lower than expected unemployment benefits, should amount to A$26.8 billion this financial year, $15.5 billion the next, and $18.6 billion the year after that.
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Entrenched budget deficits and debt exceeding $1 trillion will force tax rises, big spending cuts or cancelling income tax cuts for higher earners a few years from now, economists said.
The budget projects annual deficits for another decade, equal to about 1.5 per cent of GDP by 2031-32, or about $30 billion in todayâs dollars.
The government unleashed $95 billion of extra spending over five years in the budget, about two-thirds of which is permanent outlays for social programs such as aged care, the National Disability Insurance Scheme, mental health and childcare.
About one-third of the extra spending was temporary, for income tax refunds for low and middle earners and business tax breaks.
Treasurer Josh Frydenberg delivers the 2021-22 budget. Source: AAP/Lukas Coch.
Never before has a budget spent so much to drive unemployment down and supercharge the economy after the worst of a recession has already passed.
The economy bounced back from last year’s COVID recession far more sharply than the Treasury (or just about anyone else) expected.
The bounty from the higher-than-expected tax collections that flowed from more people than expected in work, a much higher-than-expected iron ore price, and lower than expected unemployment benefits should amount to $26.8 billion this financial year, $15.5 billion the next, and $18.6 billion the year after that.