Even the modest bipartisan version of budget repair - reducing debt as a percentage of GDP — is subject to risks. If we look back 10 years, there are valuable lessons in what can go wrong.
Jim Chalmers’ mid-year economic and fiscal update (MYEFO) will reflect upward revisions to revenue and expenditure, the latter including the impact of last week’s national cabinet decisions on NDIS and health funding. However, most of the changes coming out of national cabinet lie beyond the forward estimates.
The net effect may improve the budget bottom line, there will be continuing small deficits over the forward estimates and the 10-year medium-term, and debt as a percentage of GDP will begin to fall gradually in the next few years.
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Robert Carling is a Senior fellow at the Centre for Independent Studies, and a former IMF and federal and state Treasury economist.
