There is scarcely a soul expecting next week’s federal budget to bear much bad news for Australians.
Treasurer Josh Frydenberg is expected to have billions of extra dollars to play with thanks to rosy commodity prices and has plenty to gain from using some of the cash to woo voters, weeks out from an election.
The most popular theory is that Scott Morrison’s government will bring forward tax cuts it has already legislated, helping workers keep at least a little more of their pay after a long stretch of slow wages growth.
The prime minister has hinted revised tax cuts could be on the cards.
“Wherever I get the opportunity to give Australians further tax relief, I never miss the opportunity,” Mr Morrison said earlier this week.
The treasurer has been more direct in guaranteeing no fresh taxes will be part of the “next stage” of the coalition’s economic plan.
“It will be about balancing the books, growing the economy with more jobs and guaranteeing the essential services of schools, hospitals and roads – all without increasing taxes,” Mr Frydenberg told AAP.
Personal tax cuts that cleared parliament in June are scheduled to kick off from this financial year, with further reductions in 2022 and 2024.
They will eventually save someone on an average wage of $85,000 about $540 annually, with the package costing $144 billion.
The two major questions in play for the budget are how significant any revised tax regime will be and what other sweeteners in it will include.
Leading forecaster Deloitte Access Economics expects the government will have $2.9 billion more in revenue financial year than predicted, with commodity prices boosting company profits and the jobless rate down.
The government also tucked away $9 billion in the mid-year budget update for “decisions taken but not announced”.
Accounting firm BDO Australia believes the $9 billion war chest suggests “significant” tax cuts or one-off payments to welfare recipients are on their way.
But ANZ senior economist Cherelle Murphy is not expecting any fresh tax cuts to be groundbreaking.
“They’re not going to be particularly large in our view,” she told AAP.
“We’re talking two to three dollars a week, if we assumed that they’re giving back about half of the extra revenue that they’re getting.”
CommSec chief economist Craig James believes the budget will include a bigger range of smaller measures than usual, in order to give a wide range of Australians something to smile about.
“The government would want to be seen to be supportive of regions, states, right the way across the economy,” he told AAP.
Economists at NAB expect the government will have so much cash to play with it can produce a surplus of $1.3 billion this financial year – making a return to surplus a year earlier than expected.
The government predicted a $5.2 billion deficit for 2018/19 in its December mid-year budget update, followed by surpluses of $4.1 billion for 2019/20 and $12.5 billion in 2020/21.
Reports emerged this week that the government is planning to ramp up spending in the bush, through a regional economic package.
Health care is also a battleground for the election, with hundreds of millions of commitments to disease treatment and research and reducing out-of-pocket concerns for scans already announced.
More money for city infrastructure money will also be on the cards, with the government keen to bust congestion while reducing the migration cap from 190,000 to 160,000.
Despite the Australian government’s bottom line appearing to be in good health, the budget comes as the economy is showing signs of slowing down amid both local and international headwinds.
They include a slowdown in the global economy, falling house prices and the drought scorching Australia’s east.
The treasurer is taking the challenges in his stride and gleaning comfort from the Australian economy’s “sound” fundamentals.
“All of this is manageable, but only with a strong economic plan that gives business the confidence to invest and consumers the confidence to spend,” he says.
But as he gears up for the election campaign, Labor leader Bill Shorten has argued the budget will be aimed at making people forget the coalition’s time in government so far and won’t be built to last.
“They’re just going to hope this budget holds together by rubber bands and sticky tape and ice cream sticks for the next five weeks,” he told reporters in Melbourne on Wednesday.
© AAP 2019