Federal Budget 2018: Treasurer Scott Morrison’s rocking recovery puts economy back in Black

STRONG figures mean ScoMo is taking us off the Highway to Hell and rocking the Aussie economy Back in Black!

THE Turnbull government is on target to pull the Budget out  of  a decade in the red and rock it back into the black — a year earlier than previously forecast.

The first surplus since the GFC is expected come in at a skinny $2.2 billion, hitting the bottom line in 2019-20.

“The Australian economy is now pulling out of one of the toughest periods we have faced in generations,” Treasurer Scott Morrison said last night.

Tighter spending, impro­ved revenue and stronger ­global growth have all helped the government deliver the prettiest set of numbers in years.

Back in the black ... Treasurer Scott Morrison after handing down his Budget speech. Picture: Gary Ramage

Mr Morrison hugs his daughter Lily after delivering his speech. Picture: Kym Smith

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“This (financial year) will be the best budget outcome since the Howard government’s last budget a decade ago,” Mr Morrison said.

The Budget gets a big boost in revenue, $10 billion more in 2018-19 and $31.5 billion better off over the forward estimates.

But add in the new tax cuts announced last night, and the additional revenue over the four years is halved, to $15 ­billion.

This year the Budget will remain in deficit — $18.2 billion — before steadily ­improving in 2018-19 to a forecast deficit of $14.5 ­billion.

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By 2020-21 the surplus is forecast to grow to $10.9 ­billion.

“With the Budget returning to balance we will start paying down debt,” Mr Morrison said.

Net debt will peak at 18.6 per cent of GDP this financial year — $341 billion — and is forecast to fall by around $30 billion over the next four years. The key economic fundamentals unveiled in the Budget reflected the strongest global economic growth in six years.

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The improved revenue pool was in part inflated with higher corporate tax takings, due to a swag of big companies such as Qantas running out of tax-deductible losses in the wake of the GFC, which previously had been limiting the amount of tax they were liable to pay.

Many companies, such as Qantas, have been running out of tax-deductible losses in the wake of the GFC.

The total revenue pool for 2018-19 is expected to be $486.1 billion, up 6.6 per cent on the previous year. Expenses are still outstripping revenue — forecast to come in at $488.6 billion in 2018-19 — but at 4.2 per cent are growing at a slower pace than previous years.

“As a government we have put constraints on how much we spend and how much we tax, to grow our economy and responsibly repair the Budget,” Mr Morrison said.

The government is booking another revenue boost from a crackdown on the cash economy, forecast to deliver an extra $5.3 billion over four years.

This budget will crack down on the cash economy.

Res­tri­cting businesses which use the research and development tax break is another measure the government is counting on to improve revenue by $2.4 billion over the forward estimates.

The Budget has forecast the consumer price index to grow by 2 per cent this ­financial year and by 2.25 per cent next financial year.

Wages, which grew by 1.9 per cent in 2016-17 are forecast to pick up pace to grow by 2.25 per cent this financial year and by 2.75 per cent next financial year.

The economy was continuing to support strong jobs growth, Mr Morrison said, with 415,000 jobs created in 2017 and unemployment forecast to improve to 5.25 per cent in 2018-19.