(Bloomberg) -- Australia’s mid-year budget update showed economic reality is starting to bear down on the government’s finances.
Treasury lowered its forecast budget surplus for the 12 months through June 2020 and the following three fiscal years as it scaled back the estimated tax take over the period, according to its 2019-20 Mid-Year Economic and Fiscal Outlook released in Canberra Monday.
Economic and wage growth forecasts this fiscal year have been lowered and forecast unemployment increased, reflecting growth that has failed to reach even 2% so far this year. While the government is still forecasting surpluses across the forward estimates, they’re thinner than before and it wouldn’t take much to knock them into deficit. If the government does manage to return the books to the black, it would be the first time since before the 2008 global financial crisis.
The forecasts contain “significant revenue writedowns on the back of sustained global and domestic economic headwinds,” Treasurer Josh Frydenberg said in a statement.
Frydenberg has dismissed concerns about the slowing economy and resisted calls for additional spending to support growth. His stance flies in the face of a growing global chorus calling for looser fiscal policy, most recently with government stimulus programs announced in New Zealand and Japan. Instead, he’s sticking to a traditional conservative government playbook of trying to pay down debt to demonstrate his economic credentials.