This brief sets the scene for what may feature in the upcoming Federal Budget and assesses the likely implications for Australian business.
- To avoid the fiscal trap that many countries face – the government will need to adjust its policy settings for the long term.
- The immediate budget decline of $12 billion has not arisen from a change in projections on the expenditure side, but as a result of changes in forecast revenue.
- The expenditure side is putting increasing pressure on Australian government budgets. The main items are health, welfare, education and defence.
- In brief, declining revenue in the short term will need to be filled. Longer term, there is an unsustainable gap between rising costs – particularly in the area of health – and future revenues. Both the expenditure and revenue sides of this equation will need to be dealt with.