13 May 2015
Australia: Federal Budget Briefing 2015-16 - NAB
FXStreet (Bali) - Alan Oster, Group Chief Economist at NAB, shares his take on Tuesday's Australian federal budget, defining it as a combination of redirected policy spending broadly offset by substantial increases in revenue to GDP.
Key Quotes
"As set out in the section on the Medium Term Fiscal Outlook, the Budget really is a combination of redirected policy spending broadly offset by substantial increases in revenue to GDP – bracket creep. Outlays broadly grow in line with GDP (which is better than the previous upward trend). Also the economic impact of the Budget on the economy is relatively neutral."
"Broadly the Governments forecasts are very similar to NAB’s and hence we see the projections as credible. Of course to the extent we have all overestimated growth – especially in a low wage growth and falling commodity price world – the Budget remains open to the disappointments (especially on the revenue line) that we have seen in recent years."
"But with a credible set of forecasts (and deliberately conservative iron ore price assumption – Treasury $US 48 vis-à-vis NAB’s $US60 per tonne) the rating agencies should be relatively satisfied."
"Equally we would not expect the very negative reaction of consumers to this year’s Budget. That said, we would not really expect much of a kick to business confidence – outside of micro business."
"Of course the Budget is not the complete current fiscal story. There is still the Tax White Paper to come - the Budget had little on big tax and superannuation questions."
"Also there is still the debate about what happens to Government’s removal of $80bn in state funding for health and education in the out years. And finally, despite the Government’s best efforts, what happens in the ensuing political process is unknowable."
Key Quotes
"As set out in the section on the Medium Term Fiscal Outlook, the Budget really is a combination of redirected policy spending broadly offset by substantial increases in revenue to GDP – bracket creep. Outlays broadly grow in line with GDP (which is better than the previous upward trend). Also the economic impact of the Budget on the economy is relatively neutral."
"Broadly the Governments forecasts are very similar to NAB’s and hence we see the projections as credible. Of course to the extent we have all overestimated growth – especially in a low wage growth and falling commodity price world – the Budget remains open to the disappointments (especially on the revenue line) that we have seen in recent years."
"But with a credible set of forecasts (and deliberately conservative iron ore price assumption – Treasury $US 48 vis-à-vis NAB’s $US60 per tonne) the rating agencies should be relatively satisfied."
"Equally we would not expect the very negative reaction of consumers to this year’s Budget. That said, we would not really expect much of a kick to business confidence – outside of micro business."
"Of course the Budget is not the complete current fiscal story. There is still the Tax White Paper to come - the Budget had little on big tax and superannuation questions."
"Also there is still the debate about what happens to Government’s removal of $80bn in state funding for health and education in the out years. And finally, despite the Government’s best efforts, what happens in the ensuing political process is unknowable."