Smoky cloud hangs over budget surplus

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Matt Coughlan and Rebecca Gredley
(Australian Associated Press)

 

Treasurer Josh Frydenberg has declared Australians will have to wait until the May federal budget to find out if the bushfire crisis has torched the surplus.

Mr Frydenberg on Monday said he couldn’t determine if the books would be in the black with the economic fallout from the horror fire season still unfolding.

But a day later the treasurer said he wouldn’t provide a running commentary on the budget position outside of the two regular updates in December and May.

“Forecasts are updated twice a year at MYEFO and at budget, so you’ll need to tune in on budget night,” he told reporters in Canberra.

The mid-year budget update in December downgraded the surplus from the $7.1 billion forecast at election time to $5 billion.

The government plans to spend $500 million in this financial year on bushfire recovery, drawn from an overall kitty of $2 billion.

Prime Minister Scott Morrison has flagged the coalition is willing to sacrifice a surplus – which was a key election promise – to fund relief efforts.

Mr Frydenberg indicated keeping the nation’s finances in the black was no longer the primary focus.

“Our absolute first priority is on meeting the human cost of the bushfires,” he said.

“It’s been absolutely devastating and terrible for the people who have been affected. Lives have been lost, properties has been lost and it will take years to rebuild.”

He said the benefit of a strong economy would allow spending during an economic shock or national crisis like the bushfires.

Asked if Labor would forgive the government for not delivering a surplus, Opposition Leader Anthony Albanese said fire recovery must be the first priority.

“This will require a significant infrastructure investment but it will also require an investment in people,” he told reporters in Perth.

“It’s outrageous that there are people who are affected by the bushfires three months ago who are still living in tents as a result of the government not being able to deliver the support when it is needed.”

Meanwhile, more councils are expected to join the 33 bushfire-affected shires which have received $1 million federal grants.

Emergency Management Minister David Littleproud said the cash injections would help drive the recovery effort.

“This is about helping the community rebuild … coming together and empowering our local councils to understand and know how to do that best,” he told reporters in the Adelaide Hills on Tuesday.

He also foreshadowed further funding announcements for South Australia, hinting at a deal between the federal and state governments.

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