Westpac senior economist Darren Gibbs said Chalmers had more leeway than New Zealand’s Finance Minister Nicola Willis did.
He said Willis would probably love to deliver the energy rebates and rental subsidies Chalmers announced, but Australia had less debt and a generally stronger economy than New Zealand.
Gibbs told the Herald the Australian rebates and subsidies were designed to tackle inflation, at least in the short-term.
“But those all cost money. The cupboard’s bare here. It wasn’t bare in Australia, thanks to the high commodity prices and all the revenue that flows from that.”
Political rivals blasted Chalmers’ Budget as an unrestrained spending spree which let down first-home buyers, but the Australian Government said it struck the right balance in challenging times.
Gibbs said Chalmers’ Budget could mean more money dispensed to Australian consumers, which might benefit New Zealand exporters and tourism operators.
Conversely, a robust Australian economy could make that country more alluring for New Zealanders considering emigration.
“We’ve already seen that flow. The Australian labour market is still tight.”
In New Zealand, unemployment rose from 4 per cent in the December quarter to 4.3 per cent in the March quarter. In Australia the unemployment rate was 3.9 per cent in March.
Gibbs said Chalmers’ Budget was unlikely to send the unemployment rate up or hamper economic growth.
“If anything, it’s more supportive of growth.”
Australia’s Treasurer Jim Chalmers delivers his Budget speech at Parliament House in Canberra. Photo / Tracey Nearmy, Getty Images
ASB economists said stronger revenue delivered a second successive underlying cash surplus but the A$9.3 billion ($10.2b) result was weaker than expected.
And a deficit of A$28.3b was now forecast for 2024-25.
“The deterioration is totally driven by A$9.5b in policy changes,” ASB added.
It said these major policies included previously announced income tax cuts, and increased rental assistance.
The Labor Government’s policies also included lower medicine costs, cutting tertiary student debt, and funding to help build extra housing.
“There’s pressure to provide cost-of-living relief on the one hand and pressure not to further fuel inflation on the other,” the ABC reported.
Every household will receive A$300 in relief for energy bills.
And the Government will cut A$3b in student debt for more than three million Australians, the ABC added.
“Global challenges, high but moderating inflation, and higher interest rates have contributed to cost-of-living pressures and slower growth,” the Government said in its Budget overview.
“While many Australians remain under pressure, our economy is better placed than most to handle these challenges.”
It said unemployment was near a 50-year low and real wage growth had returned.
“This Budget strikes the right balance between keeping pressure off inflation, delivering cost-of-living relief, supporting sustainable economic growth, and strengthening public finances,” the Government added.
All 13.6 million Australian taxpayers will get a tax cut, averaging A$36 ($39.50) a week, according to the overview.
‘Big-taxing con job’
The Opposition Liberal Party called the Budget “a big-spending, big-taxing con job” which failed to support small businesses.
“Labor has added A$315b of new spending, at a time when we need restraint. That’s A$30,000 of extra spending for every Australian household,” the Liberals added.
“After two years in office and three Labor Budgets, the Government is no closer to dealing with its homegrown inflation crisis, which means more pressure on cost-of-living and interest rates higher for longer.”
“Labor’s band-aid Budget is a betrayal for renters, first home-buyers and people doing it tough,” Greens leader Adam Bandt told the ABC News Breakfast show this morning.
The Liberals said migration was out of control and Labor had fuelled a housing and rental crisis with unprecedented immigration when housing approvals were at an 11-year low.
In New Zealand, Willis will deliver the Budget on May 30.
New Zealand experienced two successive quarters of GDP decline, falling 0.3 per cent in the September quarter and 0.1 per cent in the December quarter.
Australia’s GDP rose 0.3 per cent in the September quarter and 0.2 per cent in the December quarter.
But as with New Zealand, per capita GDP in Australia shrank in both quarters.
March quarter GDP data from Statistics NZ is due on June 20.
Takes on the Budget
“Australia’s Government will boast a second consecutive Budget surplus ... courtesy of strong employment and high commodity prices, giving it cash to afford more cost-of-living relief and industry incentives,” Reuters reported.
“Jim Chalmers has splurged $7.8b on new cost-of-living measures including $300 energy subsidies designed to artificially lower inflation and heap pressure on the Reserve Bank to cut rates,” the Australian newspaper reported.
“Labor has poured billions of new dollars into the housing sector, but first-home buyers hoping for a leg up into the market have been let down and are walking away as one of the biggest losers in the Budget,” the Daily Telegraph reported.
“One year out from an election, the Albanese Government is girding against a winter of discontent. High energy and food costs, rents and mortgages are pushing some households to the edge. Anxiety is real,” a Canberra Times political analyst wrote.
John Weekes, online business editor, has covered New Zealand courts, crime, politics, breaking news and consumer affairs, and Queensland courts and politics.
