The Australian government has downgraded its predictions for both economic growth and budget surplus for this financial year in its mid-year budget update report, released Monday.
The Mid-Year Economic and Fiscal Outlook (MYEFO) revealed the government's controversial surplus, when tax revenue is greater than government spending, would sit at AUD $5 billion for the 2019-20 financial year — a significant $2.1 billion drop from the $7.1 billion figure predicted by Treasurer Josh Frydenberg in April.
Frydenberg claims the downgraded predictions can be linked to a slowing global economy and the “devastating” impact of the unrelenting drought and bushfires.
"Our devastating drought has already taken a quarter of a percentage point off GDP growth and reduced farm output by a significant amount over the last two years," he said during a press conference in Canberra. "Global trade tensions have weighed heavily on consumer and business sentiment, with forecasts for global economic growth and that of our major trading partners downgraded in today's MYEFO."
The decreased forecasts extend to the unemployment rate, which now sits at 5.25%, compared to the previous estimate of 5%. In real terms, this equates to 725,000 job-seeking Australians currently without jobs.
Wage growth has taken a similar hit, revised to 2.5% from a previous prediction of 2.75%.
The Budget is returning to surplus for the first time in 12 years.— Josh Frydenberg (@JoshFrydenberg) December 15, 2019
Today’s Mid Year Economic and Fiscal Outlook (MYEFO) demonstrates the economy’s remarkable resilience as it continues to grow enabling the Govt to pay down Labor’s debt and guarantee essential services. #MYEFOpic.twitter.com/Wj5w1osOXQ
According to the report, infrastructure projects and the aged care sector will be prioritized — with $4.2 billion and $624 million brought forward in the budget over four years, respectively.
The government has also announced additional funds to support the drought response. A further $1.3 billion has been committed since the election, which will help fund income support, financial counseling, mental health services, and rural and regional infrastructure upgrades.
The updated report has received its share of criticism.
Richard Di Natale, leader of the Australian Green party, took to Twitter to ask why achieving a surplus is such a high priority when millions throughout the country continue to live below the relative poverty line and Newstart — a government-issued income support payment — hasn’t had a real-term increase in a quarter of a century.
"What if instead of a wafer-thin surplus, we raised the rate of Newstart?” he wrote.
Likewise, criticism has arisen over the fact that no increase to foreign aid was announced, despite the surplus.
Instead of announcing increases to aid, the government revealed last week that Australia’s aid program would be reexamined and refreshed under a new review. The $4 billion-a-year aid budget is expected to center around ensuring the nation supports a secure, prosperous, and resilient Indo-Pacific — and will focus on which countries receive funding and for what outcomes.
All Australians have been encouraged to submit to the review.
Submissions of no more than five pages will be accepted until the end of January 2020 and can be submitted via email: email@example.com