Analysis of the 2024 Budget Economic and Fiscal Update (BEFU) and its Implications for the Coalition Government

The 2024 Budget has been the talk of the town, with all the razzamatazz surrounding it. However, amidst all the excitement, the underlying economic analysis seems to have been overlooked. The Budget Economic and Fiscal Update (BEFU) by the Treasury is an independent assessment that deserves more attention from the public.

Comparing the May 2024 BEFU with the September 2023 Pre-election Economic and Fiscal Update (PREFU), it is evident that there have been significant changes in the economic forecasts. The economy is expected to stagnate until the end of 2026, with productivity growth assumptions being revised downwards due to a decade of stagnation in that area.

The government’s tax changes and promises made in opposition have led to a reduction in expected tax revenue, resulting in a higher government deficit and borrowing program. The Minister of Finance’s promise to implement income tax cuts without increased borrowing seems to be misleading, as the net debt is projected to be $15 billion higher than previously forecasted.

There are concerns about the government’s ability to keep within the allocated spending limits, with potential cuts in spending adding to the challenges ahead. The Coalition Government seems to have used up its first-term room in the economy, with tax cuts amounting to a small benefit for the public.

Overall, the economic strategy outlined in the BEFU24 raises questions about the government’s future plans and the impact on the economy. The politics of this economic strategy will likely be a topic of discussion in the coming days.