Welcome to our Weekly Digest – stay in the know with some recent news updates relevant to business and the economy.
Chalmers skirts budget deficit question
Jim Chalmers declined to directly answer whether a total of forecasted $122.1bn in deficits will increase in the mid-year budget update set to be released on Wednesday. Appearing on Sky on Sunday, the Treasurer declined to directly answer whether the Mid-Year Economic and Fiscal Outlook (MYEFO) would reveal an increased total deficit over the next four years, however confirmed the forecasted figures would be greater in some years.
$100b blow to mining exports to knock billions out of federal budget
The government is forecast to suffer a $8.5 billion hit to its tax take over four years from a loss of mining export revenue. The figure will be reflected in the mid-year budget update, which will show a worsened budget position since May.
Fall in Australia’s unemployment rate sends dollar higher and stocks down, dimming hopes of interest rate cut
A surprisingly robust labour market in November, including more than 50,000 additional full-time jobs, has set back hopes of an early move by the Reserve Bank to cut interest rates. Stocks sank and the dollar rose on the news.
Business costs impact living expenses
Rising material costs, including steel and aluminium, present challenges for Australian manufacturers to navigate. Our manufacturers directly make the goods used by Australian households – food, beverages and consumer durables – and indirectly contribute by producing the industrial inputs used across the economy. The inflationary pressures facing households can often be traced back to cost pressures on industry.
Plummeting wage inflation great news for RBA
The latest data surrounding wage growth provides further evidence that Australia’s inflationary pressures are easing. SEEK’s latest advertised salary index for November revealed that salaries grew by 0.2% over the month, 0.7% over the quarter, and 3.5% annually. SEEK senior economist Blair Chapman commented, “If monthly growth remains at this rate, by this time next year, annual advertised salary growth will be back at pre-covid levels”.
Major tax changes could save $1bn in operational costs per year
Employees could pay less tax on their superannuation during the accumulation period but face bigger taxes in retirement under a radical new proposal. A new report by the Actuaries Institute says Australia’s superannuation system works but is one the most complex in the world and simpler taxation rules are needed.
Australians suffer world record income collapse
The Q3 national accounts release from the Australian Bureau of Statistics (ABS) revealed the astonishing decline in real per capita household disposable incomes. On a quarterly basis, real per capita household incomes have declined by 8.7% from the peak in Q1 2022.
Public sector is strangling economy to death
Today, there are two Australian economies. One is very sick. It is in recession, not just in per-capita terms, but in absolute terms. Interest rates are biting. Consumption went backwards over the past six months. Investment has ground to a halt. Employment growth is anaemic. The other has never been healthier. Over the past year, consumption has grown 10 times faster than in the other economy. Investment growth is at its fastest in six years. Employment growth is at its fastest in at least 30 years outside the pandemic. Steven Hamilton, assistant professor of economics at George Washington University and visiting fellow at the Tax and Transfer Policy Institute at the ANU discusses their relationship.
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