The Albanese Government’s Mid-Year Economic and Fiscal Outlook (MYEFO), passed down on 13 December 2023, updates the economic and fiscal outlook from the previous Budget. It is an opening of the books, six months after the Budget, and a requirement of clause 14 of the Charter of Budget Honesty.
As well as updating the economic and fiscal outlook, the MYEFO takes account of all decisions made since the release of the Budget which affect payments and receipts.
This MYEFO is all about cutting a range of infrastructure projects and limiting spending while riding a rise in tax receipts while attempting to do nothing that could fuel inflation.
High commodity prices, low unemployment and surging non-mining corporate profits are behind the better budget position.
MYEFO reveals shows that tax receipts over the forward estimates are $64.4 billion higher than forecast in the May Budget.
This is mostly due to personal income taxes being $30 billion higher than forecast ($9b higher for this financial year) and company tax receipts being $34.5b more over the four years ($9.2b higher this financial year.)
The Government has found $9.8b in savings since May, the bulk of which from pushing $7.4 billion in infrastructure spending beyond the forward estimates. Some 50 projects were scrapped as part of the Government’s Infrastructure Review.
Australia’s Federal Budget is on track for a $1.1bn deficit this financial year, down from a predicted $14b.
We’ve highlighted three areas that the Albanese Government have taken specific measures for:
MYEFO predicts the Government will raise $500m from stopping interest charged by the Australian Taxation Office to be claimed as a tax deduction. Taxpayers incur interest when they don’t pay their tax debts on time. Removing these deductions will encourage taxpayers to pay on time and begins from 1 July 2025.
MYEFO allocates a further $4.2b for road safety infrastructure, including a graduated increase in funding for the Roads to Recovery Program to $1b a year.
The Government will invest in important water infrastructure projects by allocating a further $180.3m through the National Water Grid Fund.
The Government has committed more than $3b in new spending. This includes $2.5b to support the Critical Minerals Strategy 2023–2030.
This comprises $2b for the Critical Minerals Facility and $500 million for related projects in Northern Australia, via the Northern Australia Infrastructure Facility (NAIF).
A Battery Supply Chain and Research Working Group will be formed to work with the US Government on battery supply chains, battery manufacturing capabilities and battery technology research and development at a cost at of $5.4m.
Another $359m over four years has been allocated to unlock the benefits of cleaner, cheaper and more reliable energy, as a critical enabler of future clean industries and broader decarbonisation.
Image source: Jim Chalmers MP Facebook