Australian budget: Higher deficit, lower growth outlook
Growth rate: The Coalition government has lowered its forecast for economic growth for the financial year to 2017 while substantially expanding the fiscal deficit. The government’s new forecast for GDP growth is 2.5%, down from 2.75% at its December budget review. The government also lowered its forecast for unemployment by mid-2017 to 5.5% from 6.0%, reflecting recent unexpected improvements in the job market.
Fiscal deficit: The deficit will rise $A10 billion to $A118.5 billion over the four years to June 2019 compared with an estimate of $A108.3 billion last December. The deficit for the next financial year is now forecast to be $A37.1 billion compared with $A33.7 billion in the December budget update, a deterioration of $A3.4 billion.
Infrastructure spending: The government has committed $A50 billion on infrastructure to bolster the economy. If elected to another three-year term, it will invest heavily in new rail, dam, road and port projects over five years. Planned projects include an inland rail line to connect Brisbane and Melbourne.
Defence spending: The government promised a $A90 billion pipeline of naval shipbuilding projects to stem the loss of manufacturing jobs in South Australia state, as well as in Western Australia. That will see 12 new French-designed submarines built, along with nine new frigates, small patrol boats and 12 larger offshore patrol vessels.
Treasurer Scott Morrison says the programme will lead to 3000 jobs and fuel growth, as well as lift defence capability. The projects will also use Australian steel to aid the struggling steel industry.