Underlying cash deficit to remain largely unchanged in May budget: ANZ
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More news: ANZ expects May’s underlying cash deficit to remain largely unchanged from the Mid-Year Economic and Fiscal Outlook (MYEFO), forecasting a deficit of $37 billion in 2025-26 and $36 billion in 2026-27.
The bank anticipates the announcement of temporary cost-of-living relief for households and businesses, alongside a spotlight on energy security via the Future Made in Australia package. ANZ also forecasts that changes to investment property tax will boost the nation’s fiscal position over the next coming decade.
ANZ noted that it expects energy supplies to remain secure, with no fuel rationing anticipated.
Chalmers mulls CGT changes, warns housing ‘most obvious’ intergenerational inequality
The news: Treasurer Jim Chalmers says intergenerational inequality is “most obvious” in the housing market, as he mulls changes to capital gains tax in the May budget.
The context: Speaking after returning from a trip to the US, Chalmers said the government will unveil “substantial savings” driven by reforms to the NDIS but warned the Middle East war has reduced its ability to cut spending.
Chalmers confirmed the government’s thinking had changed substantially since it began planning the budget over the Summer, given the US-Israeli attack on Iran has since sent oil prices soaring.
The treasurer said the “prevailing vibe” among his international colleagues was “two steps forward, and one step back”.
“There’s an extraordinary amount of uncertainty in all of that, because it relies on decisions taken in Washington and Tehran and elsewhere,” Chalmers told reporters.
“The Australian economy is in lots of ways, hostage to those developments and those decisions.”
But he insisted the budget would still include a suite tax reform, savings, and a productivity push.
The Nine newspapers reported on Sunday evening that Chalmers was leaning towards returning the capital gains tax system to the pre-1999 system, rather than reducing the 50% discount on capital gains.
Analysts have argued that Howard-era changes sparked a surge in property investor activity, pushing house prices out of reach of young Australians attempting to enter the market.
Chalmers stopped short of confirming that report, saying only that the government was “obviously considering a whole range of changes in the tax system”. Labor has steered clear of tweaking the tax system after voters rejected Bill Shorten’s proposed changes in 2019.
“We do think that there is intergenerational unfairness in the tax system and in the housing market,” he said.
“I think the housing market is where some of those intergenerational issues are most obvious, and so we are working through a range of options.”
Chalmers said the savings component would be largely driven by NDIS reforms, to be unveiled by Health Minister Mark Butler this week.
“Even the biggest supporters of the NDIS would acknowledge that the growth in spending on the NDIS is beyond what Australians can afford,” he said.
“That’s what motivates our efforts, but the primary motivation in our efforts is continuing to provide that high standard that people need.”
What they said: “It would be really strange if the budget that we hand down in May was identical to how we were sketching it out in January or February,” Chalmers said.
“It won’t be identical to what we were considering earlier in the year, but it will be ambitious.”
The sources: Jim Chalmers press conference, Nine newspapers
