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$40 billion budget buffer offers Victoria hope

·2-min read
A lone person walks in the Melbourne CBD wearing a mask and carrying grocery bags.
Australia's economy is rebounding faster than anticipated (Source: Getty)

The Government’s budget deficit is $40 billion smaller than forecast, according to new Treasury figures.

In the monthly budget statement, Treasury said over the 12 months to April the budget deficit was $177.1 billion, or 8.9 per cent of GDP.

This means that in the past two months the budget deficit has fallen $26.5 billion, showing that the economy is rebounding at a faster rate than expected.

CommSec’s chief economist Craig James said this will give the Government options to provide more assistance to individuals and businesses rebuilding from the impacts of the pandemic.

“This is important given the latest virus outbreak in Victoria,” James said.

The budget deficit is running just under $40 billion below where the Treasury expected it to be back in December last year.

The Government saved around $15 billion in spending and made $23.5 billion more than anticipated.

What does it mean for you?

Put simply this means that the Government has more money to help consumers and businesses as required.

And this is good news for some sectors in particular.

Victorian businesses, in the midst of a fourth lockdown, as well as the Queensland tourist industry could both use some extra help.

“Sectors that could get additional support are tourism, higher education and sectors or businesses that are impacted by skilled labour shortages such as home building and agriculture,” James said.

The boost to the budget will also give investors more confidence in knowing that the economic strategy by the Government and the Reserve Bank is working how it should.

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