‘Rivers of gold’: Expect a generous Budget
THE Turnbull Government is rolling in cash as tax collections grow into what one economics consultants calls "rivers of gold".
Treasurer Scott Morrison is expected to have good news on economic growth and more money to spend when he delivers the Budget - the last before the election - on Tuesday, May 8.
"The rivers of gold are running again, with the global and Australian economies doing the Budget plenty of favours," Deloitte Access Economics said today.
"It's an almost picture perfect backdrop for the taxman: not only are there more dollars in the economy than Treasury forecast, but companies and super funds have also increasingly run out of the losses they racked up during the GFC - meaning that good news on the economy is being turbocharged in terms of its effects on the tax take."
Mr Morrison gave a preview of the boost to government revenue last week when he abandoned proposals for an increase to the Medicare Levy to fund the National Disability Insurance Scheme, saying there would be enough money without a tax rise.
And Deloitte agrees.
It calculates that in the four months to February, the rolling annual cash deficit shrank by $15.4 billion, an improvement seen only twice previously in Budget history.
It forecast better-than-expected performances this financial year and the next, with big growth in profits.
"Profit taxes are generating two-thirds of the revenue revision - driven by China and higher commodity prices (and previous loss-makers now in profit generating a larger lift in taxes than in recent years). Many super funds have also used up all their GFC [global financial crisis] tax losses," Deloitte Access Economics said.
"Record job gains have finally won their arm wrestle against wage weakness, generating good gains versus official forecasts for personal taxes."
Labor accepted the growth dividend was benefiting the Budget but said the government was "completely out of excuses for the mess they've made of the Budget, including the record and growing debt on their watch".
"Even with very favourable global conditions doing wonders for the nation's finances, the Budget will still be in a far worse condition than when the Liberals took office," shadow treasurer Chris Bowen and shadow finance minister Jim Chalmers said today.
"The deficit for this year is currently eight times bigger than projected in the Liberals' first Budget in 2014, net debt has doubled, and gross debt has crashed through half-a-trillion dollars for the first time ever and is growing with no peak in sight.
"Malcolm Turnbull's $65 billion tax handout for big business, including $13.2 billion for the big banks, will only make things worse.
"It's time the Liberals put in place a more robust plan to pay down their record and growing debt with stronger surpluses over the medium term."
The government will let the figures do the talking on Budget night, and already has been suggesting income tax cuts could be on the way, as well as reductions for big business.
Deloitte Access Economics forecasts overall revenues to grow by 9.8 per cent in 2017-18, the strongest such increase seen since 2000-01, with that then followed by a further 5.7 per cent gain in 2018-19.
Overwhelmingly driven by revenue write-ups, Deloitte Access Economics sees a Budget bottom line better than the official forecasts released in late 2017 by $7.0 billion.