CANBERRA -- After softening Australians up for a deeper then expected dive into the red, Federal Treasurer Scott Morrison has managed to take the edge off this year's budget deficit, although there's to be further pain ahead as Australia is guided back to surplus over the next four years.
Overall, the Mid-Year Economic and Fiscal Outlook (MYEFO), released Monday, shows Australia's budget will be $10.4 billion worse off over four years, while welfare cheats and students will be the subject of major savings measures.
.@ScottMorrisonMP says the government has demonstrated its ability to save more than it spends #MYEFOpic.twitter.com/lTzpr1jRLc
— Sky News Australia (@SkyNewsAust) December 19, 2016
"The Government is delivering in this term of delivery," Morrison told reporters in Canberra.
"We have delivered the election commitments and we have done it with a net improvement to the Budget position in terms of policy decisions."
There's been a $30.5 billion write off of government revenue, driven according to the MYEFO statement by weaker wage and profits growth.
In a surprise move, MYEFO reveals this year's budget deficit of $37.1 billion has narrowed by $600 million since May to $36.5 billion.
But the budget update charts a slower attack on the budget deficit over the next four years to a deficit of $10 billion in 2019-20 rather than the forecast $6 billion in the May budget.
The budget remains projected to return to balance in 2020-21.
Morrison stands by the projection.
"On the best information we have able to us, the Government's plan to return the budget to balance is projected to be in 2021 and that is something that says our plan remains on track," he said.
But the Shadow Treasurer Chris Bowen said it was a "wafer-thin" surplus which could be "blown over by the slightest breeze."
A previously flagged welfare payment fraud crackdown, or "compliance measure," is listed to raise $2.1 billion over four years, while $7 billion over four years is expected to be raised through changes to the student loans system for vocational education and training students.
Also in the fine print, the government will pay down $10 billion in debt by axing the former Treasurer Joe Hockey's asset recycling fund.
The Abbott-era Asset Recycling Fund is also gone, improving the budget bottom line by $10billion by 2019/20
— Charles Croucher (@ccroucher9) December 19, 2016
MYEFO also includes funding promises from the July 2 federal election, as well as the predicted axing of Tony Abbott's Green Army program, saving $224 million over four years.
As well an underused nanny subsidy program is to shut up shop.
The weak wages growth, company profits outside mining and a softer economy are being blamed for the overall tougher financial task to get back in the black. This has overwhelmed the recent good news in the mining sector of higher iron ore and coal prices.
And MYEFO states these crucial commodity prices remain a "key uncertainty" for Australia.
Expected tax receipts have been revised down by around $3.7 billion in 2016-17 and $30.7 billion over four years.
Despite concern leading up to MYEFO's release, two of the three main international ratings agencies are maintaining Australia's prized AAA credit rating.
Moodys indicated Australia's economy is sturdy, with a "very high shock absorbing" capacity and "very strong policy making institutions".
Fitch is also staying with the AAA, while Standard & Poor's is yet to deliver its verdict.
.@ScottMorrisonMP says Australia's standing and reputation with global debt agencies is still strong after the release of the #MYEFO report pic.twitter.com/vHFmVsBnUX
— Sky News Australia (@SkyNewsAust) December 19, 2016
Morrison has highlighted more than $22 billion in budget repair measures passed by the parliament since the election, including the $6.5 billion omnibus savings bill and other measures.
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