Australia is heading for a smaller $99.2 billion budget deficit in 2021-22, according to Treasurer Josh Frydenberg’s mid-year economic and fiscal outlook (MYEFO), however a mystery $15.9 billion has sparked some questions.
The MYEFO announced on Thursday predicted economic growth of 3.75 per cent in 2021-22 - down from previous estimates of 4.25 per cent - before growing to 3.5 per cent in 2022-23.
However, it was the mystery $16 billion for decisions as-yet unannounced that has drawn questioning on Thursday. Of that, $5.6 billion is earmarked for spending before July 2022.
And around half, or $8 billion, is expected to be spent on vaccines.
The $16 billion set aside is more than 10 times the $1.5 billion worth of unannounced decisions in 2020’s MYEFO, prompting questions about whether Frydenberg and Prime Minister Scott Morrison were planning a pre-election spending spree.
Morrison is yet to set a date for the 2022 federal election, however it will fall between March and May.
“At this point, we can't allocate and confirm specific programs [associated with the $16 billion],” Frydenberg said.
“What we do know is that since we handed down the budget in May, we had the Delta variant. That required an additional $25 billion in spending in both economic and health terms.
“So, we have had to make allocations for that in the budget, and you're right - there is a contingency reserve. There are decisions taken but not yet announced.”
He said details of the spending can’t be shared because some initiatives were “commercial in confidence”.
“[There may be] issues that may relate to the purchase of vaccines, or other necessary health supports. It can be national security related,” Frydenberg said.
“So, it is [a] provision in the budget that is just there in the event that those specific areas need to be confirmed and which they would be, at a Budget which is scheduled for the end of March.”
Finance Minister Simon Birmingham denied suggestions from reporters that the $16 billion would be kept secret until the election.
“The fact is that we have to both be prudent in terms of allowing head room, but also be prudent in terms of assessing where certain risks may be,” Birmingham said.
“We are reflecting in as conservative a way as possible, in the Budget, the potential for spending, but making sure then that as we work through those in the lead-up to the next Budget, some will be realised, some may not be realised.”
New spending announced in MYEFO
The MYEFO also included several new spending announcements:
$2.3 billion for new and existing infrastructure projects and more than $500 million to support rural and regional Australia
$896 million to support a strong labour market recovery, addressing workforce shortages, workforce capability and skills needs into the future
$2.7 billion in 2021/22 and $26.4 billion over the the four years to 2024/25 to support the National Disability Insurance Scheme
$1.1 billion to support Aboriginal and Torres Strait Islander people in areas of health, education, early childhood, justice, languages and assisting families
$1.1 billion over 10 years to support reliable energy supply and a technology-driven approach to emissions reduction as part of the roadmap to net zero by 2050.