Budget update: $16bn mystery spending tucked away ahead of election

Today’s budget update revealed Prime Minister Scott Morrison has significantly boosted the government’s war chest ahead of the election.

Scott Morrison has signed off on $16bn of mystery spending decisions ahead of next year’s election, as Australia’s budget deficit bill is tipped to be $7.4bn better than forecast seven months ago.

The Mid-Year Fiscal and Economic Outlook on Thursday showed Australia’s budget deficit is estimated to be $99.2bn this financial year, down from $106.6bn forecast in May.

Real GDP is expected to grow by 4.5 per cent this year and by 4.25 per cent in 2022.

Treasurer Josh Frydenberg said the major update – which could be the last fiscal statement handed down before the election if it's decided to go to the polls before the scheduled March 29 budget – showed the government’s economic plan was working.

On Thursday, new figures released by the Australian Bureau of Statistics revealed the unemployment rate had fallen to just 4.6 per cent in November, down from 5.2 per cent the previous month.

Treasury predicts that will drop to 4.4 per cent next year and 4.25 per cent by June 2023.

Wages are also forecast to grow by 11.25 per cent over the next four years, up from 9 per cent tipped in May.

Treasurer Josh Frydenberg said Australia’s deficit was expected to be better off than previously thought. Picture: NCA NewsWire / Martin Ollman

“This result belongs to all Australians who have sacrificed so much over the last two years,” Mr Frydenberg said.

“It shows that the Morrison government’s economic plan is working. It further confirms the Australian economy is rebounding strongly.”

But the budget update also revealed the government had tucked away $15.9bn under a section headed “decisions taken but not yet announced and not for publication”.

It is unclear what proportion of this will be pre-election spending, but it is understood a significant amount will be used to fund commercial-in-confidence arrangements such as vaccine deals or quarantine facilities.

Mr Frydenberg downplayed any suggestion there would be an election spend-a-thon.

“They are measures that we expect to eventuate, but at this point, we can’t allocate and confirm specific programs,” he said.

But Opposition Treasury spokesman Jim Chalmers slammed the $16bn figure, which is up from $1.5bn in last year’s MYEFO.

He said the budget update “does absolutely nothing to crack down on rorts” and ignored the issues around stagnant wages.

“If anything this actually doubles down on the rorts and waste in the budget,” he said.

“This is a mid-year budget update which has got lots of complacency, lots of self-congratulation but nothing in terms of a plan for wages or job insecurity or skills shortages or the other issues and challenges in our economy.”

The government prepared for two scenarios in the budget update, noting Covid made things uncertain.

The first scenario involves the border reopening being pushed back and targeted lockdowns continuing in early 2022 if a concerning new variant changes the game plan.

The second scenario involves consumer confidence and pre-pandemic levels of savings returning in a “stable health environment”, with economic activity increasing by about $30bn across 2021-22 and 2022-23.

In the downside first scenario, economic activity could be about $20bn lower in 2021-22.

It would also affect employment, bringing the jobless rate above 5 per cent.

Originally published as Budget update: $16bn mystery spending tucked away ahead of election