Just hours away from delivering his second budget, Treasurer Joe Hockey says this year’s deficit will be less than the $41 billion predicted by financial markets.
Business Spectator reports Hockey said this morning his government is “going to beat that and we’re going to beat it every year”.
Hockey revealed the government has been forced to write off $90 billion of expected revenue but said the budget is “still on a credible trajectory back to surplus”.
Deloitte Access Economics previously estimated the government would deliver an underlying budget deficit of $45.9 billion for the 2014-15 financial year, with the underlying cash deficit for 2015-16 to come in at $45.3 billion.
Consumer confidence gets a boost from rate cut
Last week’s decision by the Reserve Bank of Australia to cut interest rates to the historically low level of 2% has given Aussie consumers some optimism, according to research released by ANZ-Roy Morgan today.
Consumer confidence jumped 1.7% last week, after it had fallen 2.8% the week before.
While the release of the federal budget this evening is expected to have an even greater influence on consumer outlook, confidence is close to 7% higher compared to this time in 2014 when the Abbott government’s first austere budget was released.
Confidence in household finances rose 5.6% on a year ago, reaching the highest levels since February, while consumers were also 4.5% more confident about their future finances.
Local shares up on open
The Australian sharemarket is up this morning ahead of tonight’s budget announcements.
“After a startling underperformance to start the week, the Australian sharemarket looks vulnerable today as local investors eye a global sell off in bonds, falls in US shares overnight and lower metals’ prices,” said Michael McCarthy, chief market strategist at CMC Markets.
“Futures markets are pointing to a fall of just three points at the open, but this looks very optimistic in light of the pressure on dividend yielding stocks in the financial, telco and consumer staples sectors yesterday.”
The S&P/ASX200 benchmark was up 15 points to 5640.2 points at 12:10pm AEST. On Monday, the Dow Jones closed down 047%, falling 85.94 points to 18,105.2 points.