The 2016-17 Budget has an air of familiarity about it.
A deficit remains throughout the four years of the Budget forecast period – the so-called forward estimates.
While the deficit is expected to fall substantially over the next four years – as revenues rise and expenditure decreases – this expectation is built on some optimistic economic forecasts, a practice that appears to have become embedded in Budgets since the GFC.
The focus of this Budget is very much economic policy. The Government says this Budget contains a strong plan for growth and jobs. The centrepiece of this plan is further cuts to the company tax rate for small businesses; these will be extended to medium and then all businesses over ten years. This measure is estimated to add around 1% to economic growth over the ‘longer term’ – there is no estimate on the impact on employment.
Any initiative that promotes growth is an important addition, but this is hardly a game changer for growth; nor does it address structural imbalances and skill shortages in the economy. And it comes with the hefty price tag of $5.3 billion in just the first four years; the full cost of roll out will be orders of magnitude higher.