The long-awaited surplus and the promise of more tax cuts ahead of the election
- The 2019-20 Budget “delivers” the long-awaited surplus and increased fiscal stimulus mainly via tax cuts/offsets.
- The main risk is that the revenue boost is not sustained & the budget continues to have relatively optimistic assumptions regarding wages growth.
- The impact on the RBA and shares is likely to be minimal as the fiscal stimulus in the Budget is modest.
The 2019-20 Budget had three aims: to cement the Government’s fiscal credentials by delivering the long-awaited return to budget surplus; to provide fiscal stimulus to an ailing economy; and to help get the Government re-elected.
It looks on track for the first thanks to a revenue windfall, this has provided room for fiscal stimulus and of course time will tell whether it makes a difference in the May election. Of course, while whoever wins the election will provide stimulus next financial year its timing and precise makeup won’t really be known for some time which makes the Budget a bit academic.
Remember, at the moment these are just proposals and could change as legislation passes through parliament.
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