BUDGET OUTLAY PRIMED FOR POLL POSITION

Federal Budget balances move into the red zone

After two successive years of budget surpluses, Federal Treasurer Jim Chalmers has delivered a pre-election Budget that forecasts a string of deficits in the years ahead. The Federal Budget is forecast to finish in a $27.6 billion deficit in the current 2024-25 year, with a $42.1 billion deficit projected for 2025-26. Additional spending measures in Medicare, health care, energy, and student loans are firmly aimed at reducing the cost of living. Dr Chalmers said Australia was more likely to experience a “soft landing” as it negotiated global economic uncertainty, with forecasts of higher growth in real gross domestic product (GDP) of 2.25 per cent in 2025-26, and 2.5 per cent in the following year.

Inflation tipped to land back on target

Headline inflation in Australia is forecast to finish at 2.5 per cent this financial year but rise to three per cent as economic growth picks up in 2025-26. Budget papers forecast that inflation (CPI) will then fall to 2.5 per cent in in 2026-27, within the so-called target range of 2-3 per cent. Meanwhile, net debt is forecast to rise from a forecast $556 billion in 2024-25, to $620.3 billion next financial year, and to $676.3 billion in 2026-27, when net debt is projected to reach 22.6 per cent of the nation’s GDP. Meanwhile, the Government’s headline cash balance – which includes net cash flows from investments in financial assets, or ‘off-budget’ items – is forecast to rise from $46.6 billion this current year to $65.1 billion in 2025-26.

Defence spending hits the $50 billion mark

Annual spending on Defence is forecast to rise from $49.3 billion in the current year to $51.4 billion next year and hit $61.2 billion in 2028-29. In his Budget speech, Treasurer Dr Jim Chalmers said Australia’s spending on Defence would grow beyond 2.3 per cent of GDP by the early 2030s. Budget papers attribute an additional $50 billion increase in Defence spending, over 10 years from 2024-25, to the Government’s commitment to deliver the 2024 National Defence Strategy and the Integrated Investment Program.

Intelligence review urges upgrade of AI, Cloud frameworks

Prime Minister Anthony Albanese has committed almost $45 million over the next four years to implement the priorities of an independent review of Australia’s national intelligence. Additional funds will be directed to the Office of National Intelligence, after the 18-month review delivered several recommendations on upgrading intelligence within government. The review recommended that all relevant National Intelligence Community (NIC) agencies develop top-secret Cloud transition strategies. It also urged the development of artificial intelligence (AI) governance principles, and the amendment of relevant legislation (originating from 1979) to provide stronger oversight and greater sharing of foreign intelligence.

Net overseas migration dominates population increase

Australia’s population grew by 1.8 per cent, or by 484,000 people, in the year to September 2024, latest figures show. The Australian Bureau of Statistics said the nation’s population had risen to 27.3 million people, with net overseas migration accounting for 379,800 people in the total increase. Population growth rates ranged widely across Australia; Western Australia recorded the fastest annual growth rate, at 2.5 per cent, while Tasmania recorded the lowest, at 0.3 per cent. Victoria’s growth rate of 2.1 per cent pushed the state’s population above seven million people.

King secures extra domestic gas supply

Resources Minister Madeleine King has announced that Australian energy consumers would have access to more domestically-sourced gas for a further four years. Ms King and Climate Change and Energy Minister Chris Bowen said up to 10 petajoules of gas per year would be supplied by gas producer APLNG up to 2029. Under the Government’s Gas Code of Conduct, new supply would be offered at $12/gigajoule, indexed to inflation. The Government said commercial and industrial gas customers would receive first preference for the new supply of up to 40 PJ of gas. A total 10 petajoules of gas a year of gas was enough to entirely support heating and cooking use in about 200,000 homes, the Ministers said.