Another 20 per cent of the improvement in the budget will be due to stronger commodity prices, with the rest coming from other areas, including better profits for non-mining companies.
She said the budget had improved due to stronger tax collections, but it appeared much of this would be handed back to taxpayers as cost-of-living relief. EY Oceania chief economist Cherelle Murphy says spending to relieve cost of living pressures could add to inflation pressures.“When Commonwealth policies are added to state government policies – even before considering this year’s budget commitments – total spending across all layers of government is higher as a share of GDP over the coming four years than in the pre-COVID period.
The budget will confirm a slowdown in the economy as inflation and the Reserve Bank’s increases to interest rates hit consumers.Growth is forecast to slow sharply over the next 12 to 18 months. The Reserve is forecasting the economy to expand just 1.25 per cent this calendar year.