Independent assessment backs Govt forecast
An independent assessment of the federal budget and the economy is largely identical to the Labor government’s own projections.
The Pre-election Economic and Fiscal Outlook (PEFO) compiled by the departments of Treasury and Finance sticks to the forecasts for slower economic growth, rising unemployment and larger deficits over the next three years.
However, the departments expect a slightly larger surplus in 2016/17 of $4.2 billion, rather than $4 billion, partly as a result of a lower Australian dollar.
Labor has been pressing the opposition to release its election policy costings upon the release of the outlook.
“We will be starting to announce some of our significant savings after we have had a thorough consideration of the PEFO document,” Opposition Leader Tony Abbott told reporters in the Blue Mountains in the Liberal-held Sydney seat of Macquarie on Tuesday.
You might like
“Everyone will see that the overall budget position is better off under the coalition.”
The PEFO released on Tuesday also shows the economy will grow by 2.5 per cent in 2013/14 and three per cent in 2014/15 – in line with Labor’s expectations.
“Against the backdrop of a still challenging global outlook, the Australian economy is expected to transition away from resource-investment led growth towards broader-based growth, although this transition may not occur as smoothly as forecast,” it says.
“A rebalancing of growth towards the non-resource sectors is needed to deliver sustained economic growth.
Stay informed, daily
“While this transition has commenced, it is now expected to take longer than at budget (time).”
However, sustained low interest rates and a lower Australian dollar exchange rate were expected to underpin a return to around trend growth in 2014/15.
This financial year’s budget deficit is forecast at $30.1 billion, which is unchanged from the government’s economic update released on August 2 and larger than the $18 billion shortfall predicted in the May budget.
The PEFO sticks to Labor’s forecast for the unemployment rate to rise to 6.25 per cent in 2013/14 and 2014/15, from 5.7 per cent now.
Inflation is expected to remain contained at 2.5 per cent in 2013/14 and two per cent in 2014/15.
This is comfortably within the Reserve Bank of Australia’s two to three per cent inflation target band.
The PEFO also sets out changes to spending and revenue measures since August 2.
These include money allocated to the states and territories that haven’t signed up to Labor’s Better Schools plan, and a $34 million saving from not proceeding with the referendum on local government at the September 7 election.
The prime minister’s department has also set aside $41.6 million for an “economic competitiveness fund” and earmarked $100 million for the Royal Victorian Eye and Ear Hospital redevelopment from 2014/15.
Western Australia gets $39 million over two years for its national disability insurance scheme launch.
