Mid-year budget update 2018: Josh Frydenberg unveils best budget figures since Howard era

Scott Morrison will have a potential war chest of about $10.8 billion to splash on pre-election sweeteners thanks to Australia’s booming economy — and more tax cuts could be on the way.

Scott Morrison will have a potential a war chest of about $10.8 billion to splash on pre-election sweeteners thanks to Australia’s booming economy.

It could mean up to $9 billion in more tax cuts for Australians are on the way.

The figure was revealed today as Treasurer Josh Frydenberg unveiled the nation’s best budget bottom line since the Howard Government.

Mr Frydenberg also announced Australia’s projected surpluses would skyrocket over the next four years to almost $30 billion.

It’s a pre-Christmas gift for the government as it tries to win back voter support after a tumultuous year and seeks to showcase the Coalition’s economic management skills ahead of the federal election in May.

Treasurer Josh Frydenberg and Finance Minister Mathias Cormann in the Treasurers office before the release of the mid-year economic and fiscal outlook (MYEFO) at Parliament House in Canberra. Picture Kym Smith

The mid-year budget papers show the government has budgeted more than $10.8 billion for “decisions taken but not yet announced”, suggesting the Prime Minister will have a hefty war chest ahead of next year’s election.

The sum includes more than $9 billion in forgone tax revenues over the next three years, suggesting more tax cuts could be on the way, and more than $1 billion for spending commitments that have yet to be announced.

Mr Frydenberg wouldn’t be drawn on whether extra tax cuts were on the horizon today but didn’t rule them out.

“We are committed to targeted spending and lower taxes - that’s our track record and it’s delivered more than 1.1 million new jobs. But we’re not going to make any announcements today,” he told reporters in Canberra.

“What we are saying is that we will approach all these issues in a carefully considered, methodical way, just as we have done to date.”

Finance Minister Mathias Cormann was also coy, saying: “It is no secret we are committed to lower taxes as part of our plan to strengthen the economy, create more jobs and ensure that Australians have the best possible opportunity to get ahead.”

He added that any announcements would be made “in the usual way between now and the election”.

The budget bottom line has improved by $9 billion, with the deficit more than halving from a projected $14.5 billion to just $5.2 billion, according to the mid-year budget update.

And next year’s return to surplus has been upgraded from a wafer-thin $2.2 billion to $4.1 billion as individual Australians and companies paid more tax than expected and jobs growth projections were revised up.

The Treasurer said today’s bonanza budget figures highlighted the Coalition’s strong economic management and argued that Australians shouldn’t risk voting Labor in at the next election.

“Today’s strong budget update is no accident,” he said.

“It’s the product of hard-earned gains over more than five years and these can be quickly and easily squandered should Australia allow the Labor Party to revert to their high-taxing, high-spending agenda which, as they have shown before, is a recipe for less jobs and lower growth.”

But Shadow Treasurer Chris Bowen said the Coalition was simply “riding on the back of a good international economy” and had “given up on the task of budget repair themselves”.

He noted wages growth, investment growth and consumption growth had been revised down since the budget and the only the terms of trade, “what the world is prepared to pay us for our commodities - the one thing which this government has absolutely no influence over” was up.

Mr Bowen argued Labor would offer “prudent budgeting based on difficult decisions” that would put Australians “at the heart of our considerations when it comes to housing affordability, wages growth and costs of living”.

The mid-year budget update also showed the nation’s unemployment rate is expected to remain steady at 5 per cent over next four years, its lowest rate since 2012.