Australia’s Labor government is forecast to report a smaller revenue increase in its upcoming federal budget, citing global economic weakness and a slowing domestic economy as major factors. Despite announcing a budget surplus on May 14, the government has acknowledged that the revenue upgrade will be lower than in previous years due to falling commodity prices and a softening labor market.
Tax receipt upgrades in the forthcoming budget, excluding those from goods and services tax, are expected to be over A$100 billion below the average upgrade of A$129 billion seen in the last three budgets. This decline is attributed to challenges facing the economy, including decreased global demand, slower domestic growth, a weakening job market, and lower commodity prices.
Treasurer Jim Chalmers has acknowledged the realities of the current economic environment and stated that massive revenue upgrades from past budgets were not expected to be sustained. He identified weaker commodity prices and rising unemployment, with the jobless rate hitting a two-year high of 4.1% in January, as key factors impacting revenue projections.
Chalmers also highlighted concerns about events in the Middle East affecting the global economy, which would shape decisions in the upcoming budget. With uncertainty prevailing in the economic landscape, Australia remains cautious about revenue expectations and growth prospects in the near term.