Mid-Year Economic and Fiscal Outlook (MYEFO)

[Juliar]

ScoMo steers a delicate course for an up tick in 2020 now that Trump and China have reached an agreement on some of their trade war.

All Australians should go down on their knees and give THANKS to GOD that the Greeny controlled Labor Party did not get in and reduce Australia to dust and of course RESTART the BOATS!!!!!!




Vital signs: Australia’s wafer-thin surplus rests on a mine disaster in Brazil
Richard Holden 10:06pm, Dec 15, 2019 Updated: 38m ago


An aerial shot of the Córrego do Feijão mine disaster.. The collapse of the Brumadinho dam at the Córrego do Feijão iron ore mine has helped Australia's budget. Photo: Getty


On Monday the Australian government will release the Mid-Year Economic and Fiscal Outlook (MYEFO).

This will – as required by the Charter of Budget Honesty – provide an update on the key assumptions made in this year’s budget, and track the implications of decisions made since the budget for the projected surplus.

There are two things you can count on about MYEFO.

First, the government will have to pare back its forecasts for economic growth, wages growth and employment growth.

Second, no matter what the economic reality is, the forecast for a budget surplus will remain.

The government has made economic management – as measured by the rather dubious criterion of budget balance – the central plank of its electoral strategy.

As the Australian National University’s 2019 Australian Election Study revealed, voters preferred the government’s economic policies to Labor’s by a wide margin (47 per cent to 21 per cent, with 17 per cent thinking there was no difference).

On the management of government debt, the margin was 44 per cent to 18 per cent.

But the economy isn’t doing very well.

GDP annual growth is 1.7 per cent, not the 2.75 per cent forecast in the budget.

The unemployment rate is 5.3 per cent, compared to the forecast of 5.0 per cent. Wage growth is 2.2 per cent, not the 2.75 per cent forecast.

Iron ore supplements
The forecast budget surplus for the fiscal year to June 2020 will be made to hang together, thanks to a higher-than-forecast iron ore price.

That price, which determines the dollar value of Australia’s biggest export and hence the tax revenue it generates, is not reflected in the GDP figure, which only takes into account volumes.

The iron-ore price is now $US92.50 ($134.50) a tonne.

The budget assumed the average price would be $US88 for the 2020 budget year, thanks to a reduction in the international supply of iron ore caused by a tailings dam bursting in January at the Córrego do Feijão mine near the town of Brumadinho in south-eastern Brazil.

Read on here

https://thenewdaily.com.au/finance/news ... -iron-ore/

[Juliar]

The Budget Surplus is now $5 billion just announced by 2GB. And give THANKS again that the Greeny controlled Labor Parry did not get in as the garbage from Labor Chalmers indicates.





Treasurer Josh Frydenberg given stage to update economic state of play
Samantha Maiden 10:04pm, Dec 15, 2019 Updated: 11:39pm, Dec 15


Treasurer Josh Frydenberg will again take the spotlight to update his budget from April. Photo: AAP

Treasurer Josh Frydenberg will defy Labor’s calls to bring forward personal income tax cuts to stimulate the economy in Monday’s mid-year budget update.

As the government pledges the first surplus in a decade will survive a massive revenue writedown, the Morrison government will outline an update to the budget position that is expected to include gloomier predictions on wage growth for workers than previously forecast.

It will also update the budget figures on new spending on aged care and the drought, which has been announced since the election.

The Australian newspaper reported on Sunday night the government will confirm a revenue writedown of $30 billion that will be offset by savings and not delay the projected surplus this year.

The Treasurer announced a forecast surplus in the April 2 budget, which is expected to be confirmed this financial year.

“It’s not official until the final budget outcome next year in September,” Deloitte Access Economics’ Chris Richardson said.

“We get data monthly and that seems to still be on track.”

Labor’s treasury spokesman Jim Chalmers said workers were worse off by up to $2000 a year as a result of lower-than-expected wage growth.

“The mid-year update will be a humiliating admission that the government has got the economy wrong at every turn,” Dr Chalmers said.

“A humiliating admission that growth is slower, wages are weaker, and more than half the debt that has accumulated is Liberal debt.

“It will be a signed confession that, after promising to make the economy even stronger at the election, the Morrison government has made the economy even weaker.”

Dr Chalmers said the average full-time worker was earning $2200 less than the government said they would be.

“What this shows is that no matter how hard Australians are working, they just can’t seem to get ahead,” he said.

“Australians are working really hard, but their wages are stagnant.

“They can’t keep up with the skyrocketing costs of childcare, electricity and private health insurance.

“Ordinary Australians are copping it in the neck under this government, which has mismanaged the economy at every single turn.

“Wages are the best example of that.

“The mid-year update is their opportunity to come up with a comprehensive plan to turn around an economy that has deteriorated substantially since they took over.”

But Finance Minister Mathias Cormann rejected suggestions that workers’ wages were not growing fast enough.

“Wages are not stagnant. That is just inaccurate Labor Party political rhetoric,” Senator Cormann said.

“Real wages are growing more strongly than when Labor lost government. Wages continue to grow faster than inflation.

“Over the last quarter according to the National Accounts data, the growth in disposable income for people across Australia was the highest in more than a decade.”

The Treasurer has previously flagged he’s in talks with big business to provide further tax relief to help create jobs.

This year’s budget on April 2 announced an extension of the instant asset write-off but only for companies with a turnover of less than $50 million a year.

Reflecting on the British election result, Dr Chalmers said it was self-evident that Labor in Australia and overseas in the UK didn’t build a big enough constituency for change.

“The lesson for centre-left parties is that you don’t beat populism of the right with populism of the left,” Dr Chalmers said.

“I’ve been saying that for some time now. You can’t win an election just by preaching to your base.

“You need to build much bigger constituencies of support and that begins with a bedrock of economic credibility.”

He also accused Prime Minister Scott Morrison of failing to take real action on climate change.

“This debate has become unnecessarily polarised and Scott Morrison has fed that because he’s always looking for an excuse not to do anything on climate change,” he said.

“He’s always looking for a distraction from the fact that we’ve got emissions rising.

“He’s always looking for a political wedge and a scare campaign. But that doesn’t reflect where the Australian people are at.

“What the Australian people want is for us to listen respectfully to the experts and to the science.

“They want genuine action taken on climate change in a way that is respectful of people’s lives and livelihoods in places like regional Queensland.”

https://thenewdaily.com.au/news/nationa ... erg-myefo/

[Redneck]

Yep Scomo the man without a plan for anything!

[Valkie]

Yep Scomo the man without a plan for anything!

Be fair, he has a plan.

To screw the working class.

To sell off everything

To make sure he and his mates are well and Truely covered.

To screw pensioners ( or preferably kill them off)

And to present a bull shite budget.

[Juliar]

The usual Lefty trying to downgrade it all to feel better.

But what is as rare as hens teeth in Labor land, a surplus. Brilliant economic management by ScoMo and Co.

One shudders to think how bad this report would if the destructive Greeny controlled Labor Party had gotten in!!!!



A skinny surplus is easier to sell, but the Federal Government is under pressure to start spending
By business editor Ian Verrender Updated about 4 hours ago

It's the long-promised Christmas gift hardly anyone now seems to want.

But after a decade of disappointments, missteps and broken promises, Josh Frydenberg is determined to deliver a budget surplus this financial year whether you like it or not.

Admittedly, it's a much skinnier surplus than the one promised at election time: about $21 billion shaved from those estimates over the next four years.

Still, that puts the Treasurer at odds with vast swathes of the economics fraternity, the business community and, more importantly, the Reserve Bank of Australia.

All are pressuring the Government to jettison the surplus and to start spending, particularly on big-ticket infrastructure items to boost employment, help lift wages and improve long-term productivity.

RBA under pressure to kickstart growth
The damaging chasm between the RBA and the Federal Government over the economic outlook is best illustrated by stark differences over what is required to fire up wage growth.

The Reserve Bank argues that unemployment needs to drop to about 4 per cent before labour shortfalls feed through to higher wages.

Economy's rock and hard place

The Reserve Bank and Federal Government are facing an economic dilemma that is largely born out of politics.
Given our jobless rate currently sits at 5.2 per cent, a major stimulus would be required to get anywhere near that mark.

In the Mid-Year Economic and Fiscal Outlook, however, Treasury maintained the decades-long belief that the unemployment sweet spot is 5 per cent — meaning we're only a whisker away from a wages growth break-out.

So, no need to open the cash spigots, as far as the Federal Government is concerned.

And that puts the onus back on the RBA to kickstart domestic growth.

A February rate cut to a record low of 0.5 per cent now is on the cards, after three cuts this year.

Housing prices tied to our spending funk
The mid-year outlook document paints a picture of a decelerating economy under severe domestic pressure that has been propped up by government spending and higher-than-anticipated commodity prices — a boom that is not expected to last.

Forecasts have been slashed for growth and inflation, although for many, they still are well above realistic targets.

Consumers are on strike

The latest economic growth figures show Australia stumbling along, pulled down by a strike in consumer spending and business investment.
GDP growth has been cut dramatically, to 2.25 per cent. The most recent reading, however, was an annual rate of 1.7 per cent for the September quarter.

Inflation forecasts have been trimmed to 2 per cent. But we haven't seen inflation above 2 per cent for the best part of four years as the RBA has tried in vain to reach that target.

There is, however, one bit of common ground between the Government and the RBA.

Both are hoping that a recovery in housing prices will help lift consumers out of their spending funk.

The theory goes that, as real estate prices rise, consumers feel richer and spend more. It's worked plenty of times in the past.

The dampener is that with Australian household debt at record levels, it would appear most Australians are using the recent tax and interest rate cuts to pay off their home loans, and with property markets roaring back to record levels in the two biggest markets, there is limited scope for a "wealth effect" redux.

For sale sign outside an apartment building along a street in Brisbane on October 31, 2018.
The theory goes that, as real estate prices rise, consumers feel richer and spend more. (ABC News: Liz Pickering)

Lowe delivers some Christmas cheer
To a certain extent, the scaling back in surplus estimates — to $5 billion this year from the previous $7 billion estimate — politically could work in the Government's favour.

It would be a difficult to justify banking cash from strong iron ore prices as the domestic economy was tanking.

A skinny surplus, or even a balanced budget, during tough times seems more responsible and easier to sell the political message that it wants to pay down debt — to strengthen our finances in case the global economy deteriorates.

On that front, the Treasurer has been delivered some Christmas cheer from RBA governor Philip Lowe.

Those three rate cuts will dramatically lower the bill on our national debt over the next decade.

https://www.abc.net.au/news/2019-12-16/ ... t/11802622

[Juliar]

The amateurish crudeness of the Labor rabble rouser "treasurer" Chalmers stands in dejected contrast to the sophisticated methodical economic brilliance of ScoMo and Co. 

Why are Labor "treasurers" always so hopeless ? Is it their union upbringing as union brown nosers ?




MYEFO: Coalition keeps steady hand on the tiller
SIMON BENSON 9:34PM DECEMBER 16, 2019

The Morrison government has manifestly changed the political culture of budget and economic management.

After stabilising the rapidly deteriorating position it inherited in 2013, it avoided the folly of using heroic assumptions to build bigger numbers in the vain hope they would be right at the end of the fiscal year.

It has, in fact, done the opposite.

Treasury has clearly been directed to keep its assumptions around commodity prices overly conservative.

It has also built the grim forecasts for growth in both revenue and the economy more broadly on trade tensions between China and the US, which have shown signs of resolution.

It is no feat of magic that for the past three years the actual budget outcomes have always outperformed the forecasts.

Yesterday’s mid-year update was no different. It was designed to set the government up for its first third-term budget, which will in turn build the foundations for the next election.

It is not only smart politics but prudent management.

Mathias Cormann, now the longest serving Finance Minister, and Josh Frydenberg — and Scott Morrison before him — have introduced a calm and rational response to shifting global and domestic conditions and are making cool-headed judgments in an environment of overreaction and hysteria.

This is largely the platform on which it was elected.

There is no surprise that economic growth is softer than forecast, but in the context of the global environment, with other Western democracies going into recession, it isn’t that bad.

The first three quarters of growth for this calendar year have been higher than the final two quarters of 2018.

Labor has understandably targeted the one hip-pocket issue still dogging the government. There is an inconvenient but unremarkable truth about wage growth. Real wage growth went down under Labor and has gone up under the Coalition. Obviously a low inflation environment helps. With tax cuts factored in, people’s disposable income is now higher.

Cormann dared to stray into commentary on wage growth before and has refused to resile from it, despite the hysterical reaction to it.

Cormann rightly pointed out before the election that it was critically important that wages were allowed to adjust in “the context of economic conditions to avoid massive spikes in unemployment”.

This is what a flexible labour market is supposed to do.

Losing your job would be arguably more disruptive than not getting a decent pay rise, right?

The Treasurer and Cormann have taken a workmanlike approach to the first post-election update by delivering what it is supposed to be. An update on the fiscal and economic outlook.

They have resisted calls for the surplus to be ditched in favour of a kneejerk cash splash.

The fiscal strategy contained in MYEFO was surprisingly vague, which might allow for an interpretation that suggests the government was injecting some wriggle room for fiscal intervention down the track if ever needed.

But it has made the political judgment that it’s better to take the hit with bad numbers in MYEFO — which very few people will have paid any attention to in the week before Christmas — so they can look like geniuses in May.

https://www.theaustralian.com.au/nation ... 06309cb461

[Juliar]

And how about some REAL COMMENTS from REAL people ?

Jonathon 7 HOURS AGO
But what would you have them do? This is the structural end result of the 30 year debt super cycle. For an open trading nation such as Australia with our own non-reserve currency some fiscal room will be much appreciated in due course. This is much more rational than a quick $20-50 billion infrastructure splash which will predominantly be wasted and simply extend the cycle another 6 months or so and leave us poorer to deal with it.
The only sensible thing for the government to do is reign in spending (not much happening here) and wait for the wave to come across us...


George 4 HOURS AGO
Firstly you would de-regulate business. Increase the depreciation allowance and encourage business to expand. You could make our ports larger and more productive considering we are a large island. You could build big infrastructure projects like paving pipes to pipe water down to drought ridden farmers. You don’t let the reserve bank do the heavy lifting for you and drive down interest rates. It has killed confidence. You need to invest in scientific research ect, ect. You don’t just do nothing. It is arrogant and lazy and killing our country.


Chris 4 HOURS AGO
This 'do nothing' government has succeeded in returning the budget to surplus, reducing unemployment, and maintaining a growth rate higher than almost all developed countries.  I hope we have lots more of this 'do nothing' govt..


Alistair 15 HOURS AGO
It is a simple choice really.  A Government which acts responsibly with the budget and starts reducing debt, or a rabid opposition who never met a single budget forecast last time they were in power and spent money recklessly every time a knee jerk reaction seemed required.
Again we should be so happy that we dodged that bullet in May.


Chris 14 HOURS AGO
Indeed, Wayne Swan's 10-years of falsely promised surpluses based on wildly inaccurate growth assumptions and massive spending obligations on Gonsky and health placed beyond the 4- and 10-year forecast 'windows' so that Labor could claim the moral high ground without having to account for it.

Not to mention spending the Howard / Costello surplus - pink bats, the education revolution (remember the "computer for every student" promise - where did that end up?), the flat screen TV bonus (otherwise known as the $900 fiscal stimulus cheques) etc, etc.

Labor must continue to be held responsible for the worst economic management in recent history, especially given they presented an even more reckless proposition to Australians at the last election - proving they have not learnt a damn thing!


Rod 11 HOURS AGO
"Labor must continue to be held responsible for the worst economic management in recent history,"
Labor must continue to be held responsible for the worst economic management in history!

[Juliar]

And how about some REAL COMMENTS from REAL people ?

[Juliar]

The Goodness just keeps on coming as the TRUE assessment of our economy is released.


Strength and security in Conservative unity



MYEFO Statement – Keeping our Economy Strong
DECEMBER 16, 2019 11:46 AM AEDT

Australians can be confident about their economic future. We have the first current account surplus in 40 years, the lowest welfare dependency in 30 years, the biggest tax cuts in 20 years, and the budget is in balance for the first time in 11 years.

More than 1.4 million new jobs have been created since we came to Government; we are investing record amounts in schools, hospitals, aged care and disability support; household disposable incomes have seen their fastest increase in a decade off the back of the tax cuts and Australia has maintained its AAA credit rating.

The Australian economy’s remarkable resilience comes at a time of significant global and domestic headwinds.

Our devastating drought has already taken a quarter of a percentage point off GDP growth and reduced farm output by around 18 per cent over the last two years.

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.

Despite these challenges, MYEFO demonstrates that the Australian economy continues to grow with the Budget returning to surplus for the first time in 12 years.

There are three key takeout’s from today’s MYEFO.

First, the Government is living within its means, paying down Labor’s debt without increasing taxes.

Surpluses over the forward estimates total $23.5 billion and build to 1 per cent of GDP by 2026-27. With a forecast surplus of $5 billion in 2019-20, it is a $53.5 billion turnaround on the deficit we inherited upon coming to Government.

With gross debt having peaked in 2017-18 and net debt falling over the forward estimates, the nation’s interest bill on its debt burden falls from $19 billion last year to $14.5 billion in 2022-23.

Over the forward estimates in cumulative terms, this amounts to $13.5 billion that no longer needs to be spent on interest payments.

This stronger fiscal position is achieved with a tax to GDP ratio of 23.1 per cent this year that falls to 22.9 per cent at the end of the forwards.

Real growth in spending is 1.3 per cent per annum on average over the forwards, reflecting more Australians in work.

Spending as a proportion of GDP is at 24.5 per cent this year, below the 30 year average.

Our pathway to surplus has been steady and consistent, not relying upon overly optimistic commodity prices.

In MYEFO, we have kept the iron ore price assumption at US$55 per tonne by the end of the June quarter 2020, despite the current spot price being around US$85 a tonne.

Metallurgical and thermal coal price assumptions have both been reduced to US$134 and US$64 respectively, reflecting recent price movements.

This is impacting on nominal GDP growth which is forecast to be 3¼ per cent in 2019-20 and 2¼ per cent in 2020-21. This impacts on revenue forecasts which have been revised in MYEFO.



Second, MYEFO demonstrates that the Australian economy continues to grow. This year growth is forecast to be 2¼ per cent, lifting to 2¾ per cent next year.

Next year the Australian economy is expected to grow faster than any nation in the G7, and faster than the OECD average of 1.6 per cent.

Growth is being driven by a combination of factors including public final demand, household consumption, business investment and exports.

Public final demand which covers consumption and investment, including NDIS and transport infrastructure spending, is forecast to grow to 4¾ per cent this year which is up from budget, and mining investment is forecast to grow for the first time in seven years.

Household consumption, while lower than budget, is still forecast to grow by 1¾ per cent in 2019-20. With the recent national accounts showing household disposable income had its fastest rate of growth in a decade off the back of the Government’s tax cuts.

Export growth remains strong, supported by new free trade agreements and increased demand for our services exports which is forecast to increase 5½ per cent in 2019-20.

The labour market remains strong with employment growth forecast to be 1¾ per cent in 2019-20 and the participation rate remaining around historic highs of 66 per cent, upgraded from 65½ per cent at budget.

While wage growth and inflation have both been revised downwards, wages are forecast to continue to increase at 2½ per cent this year and next, which is above the forecast for the rate of inflation.



Third, with the Government’s economic plan delivering continued economic growth and a stronger budget position, MYEFO demonstrates we have the capacity and flexibility to invest more in the areas where we need it most.

MYEFO confirms that since the budget, we have made policy decisions to provide an additional $8.3 billion over forward estimates, including $2.4 billion in 2019-20.

This includes $4.2 billion in accelerated infrastructure projects over the forward estimates, which is part of our $100 billion 10 year infrastructure pipeline.

There is $2.9 billion of work brought forward on projects including the north east link, north south corridor, Tonkin, Bass, Bruce and Princes highways, and $1.3 billion in new projects.

There is additional funding for drought support including further investments in the Drought Communities Support Initiative with $300 million to support eligible councils to complete capital works, $138 million for roads to recovery for 128 local government areas impacted by drought, and additional funding for income support, financial counselling and mental health services.

The budget update also includes $624 million in additional funding for aged care including half a billion dollars for 10,000 home care packages, $25 million to improve medication management to reduce the use of chemical constraints in aged care, and $10 million for dementia training for aged care workers.

As we go forward, we will continue to maintain a disciplined and responsible approach to managing the nation’s finances.

With the budget back under control, our fiscal strategy now focuses on paying down Labor’s debt with sustainable surpluses over the cycle, keeping taxes low and under our self-imposed cap and targeting spending to boost productivity, workforce participation and guaranteeing the essential services that people need and rely upon.

In our 29th consecutive year of economic growth, Australians can rightly be confident about their economic future.

https://www.miragenews.com/myefo-statem ... my-strong/