MYEFO 2014-15: Deficit for this year increases by $10 billion

Australia is projected to return to Budget surplus in the 2019-20 financial year following steeper deficits than originally expected, according to the Federal Government’s Mid-Year Economic and Fiscal Outlook (MYEFO) released yesterday.

The deficit for this year will be $40.4 billion, $10 billion more than the $29.8 billion forecast when the Budget was released in May.

The deficits projected for the 2015-16 and 2017-18 financial years are also higher than originally predicted.

Federal Treasurer Joe Hockey said the higher deficits could be attributed to falling export prices and tax receipts, as well as the stalling of Budget measures in the Senate.

“Our nation’s export income has not been what we expected. For example iron ore, which is one fifth of our nation’s export dollars, has fallen from $120 a tonne at the beginning of this year to around $60 a tonne today,” he said.

“Company tax receipts are expected to be $2.3 billion less this year ($14.4 billion over 4 years). Income tax is expected to be $2.3 billion less this year ($8.billion over 4 years).”

Hockey priced the Senate’s refusal to accept all of the government’s policies (such as their controversial higher education reforms, and Medicare co-payment strategy) at $10.6 billion.

The Australian Chamber of Commerce and Industry (ACCI) also criticised the Senate. ACCI CEO Kate Carnell said, “the Budget is a mess and [the Senate] are not letting the government take the necessary steps to fix it”.

Shadow Treasurer Chris Bowen said the Government should not have promised a surplus they couldn’t deliver.

“[The] Budget update is a clear indication that the Abbott Government’s first Budget continues to inflict significant damage on the Australian economy,” he said.

“The Government’s unfair Budget is having a negative impact on business confidence, on consumer confidence and on Australia’s unemployment rate.”

In the face of criticism, Hockey remained positive.

Despite a fall in expected revenue of around $100 billion since the 2013/14 Budget, Hockey said debt is projected to be almost $170 billion less than expected one year ago, meaning that the government had “made a good start”.

“There is more work to be done but we are on the right track,” he said.