Treasurer Scott Morrison insists next week’s budget will not be spending the benefits from a temporary windfall in tax revenues and will again focus on strengthening the Australian economy.
Speaking outside the Treasury building in Canberra, Mr Morrison said it will be a responsible budget built on very cautious forecasts.
‘We will continue to maintain that cautiousness in how we forecast and how we look ahead, but it is true that the economy has been improving,’ he said on Monday.
‘We are seeing our companies become profitable again. That is a good thing.’
Opposition Leader Bill Shorten described it as a ‘convenient’ surge in revenue for a tremendous improvement to the budget bottom line.
‘Just in the nick of time for a desperate pre-election cash splash,’ Mr Shorten said during a lunchtime speech in Sydney.
Avid budget watcher and economist Chris Richardson said the Turnbull government is enjoying the biggest surge in company tax revenue in 16 years.
While this will put the budget bottom line in much better shape in both this financial year and next, he warned it would be wrong for politicians to bank on such wealth beyond that.
He reiterated his objection to flagged personal income tax cuts.
‘The oldest budgetary mistake in the book is to take better economic news and promise it away,’ Mr Richardson told AAP.
‘We recommend just wait a bit and see the whites of the eyes of a couple of surpluses.’
But Prime Minister Malcolm Turnbull believes the government can provide substantial resources to every essential service because of the strength of the economy.
‘That enables us to reduce taxes where we can afford to do so and still bring the budget back into balance,’ he told reporters in Sydney.
Releasing his Deloitte Access Economics Budget Monitor, Mr Richardson said he expects Treasury to produce ‘even happier’ budget numbers than his own, allowing it to spend up to $8 billion a year on relatively solid personal tax cuts.
While remaining a strong supporter of budget repair, Mr Richardson is also concerned unemployment benefits have become ’embarrassingly inadequate’ and is urging a $50 per week increase while indexing them to wages, which he believes would be $3 billion well spent.
Welfare advocate ACOSS chief Cassandra Goldie said Mr Richardson ‘is spot on’.
‘The single most effective way for the government to relieve the worst poverty is to raise the lowest social security payment,’ she said in a statement.
Greens senator Rachel Siewert agreed, saying the Newstart payment is ‘woefully low’ and should be increased by $75 per week.
Mr Morrison appeared to disagree, saying the government has always been of the view that the best form of welfare is a job.
‘Under this government, we have got to the lowest level of welfare dependency of working age Australians in 25 years,’ he said.
DELOITTE ACCESS ECONOMICS BUDGET FORECASTS.
$16.6 billion deficit (versus $23.6 billion deficit at time of December’s mid-year budget review).
$13.3 billion deficit (versus $20.5 billion deficit).
$5.3 billion deficit (versus $2.6 billion deficit).
$3.8 billion surplus (versus $10.2 billion surplus).