A strong Chinese economy and two Reserve Bank interest rate cuts last year have delivered a boost to Australia’s coffers.
But a leading economist warns the $100 billion surge in national income this year will not make much difference to the Budget.
Deloitte Access Economics’ Chris Richardson says that is partly because the money has already been counted.
“It won’t terribly translate into better news for the Budget, partly because the Treasurer’s previous update was more or less on the money there and because wage growth remains pretty weak and that’s weighing on the tax take.”
Mr Richardson warns the return to surplus could be slower than Treasury is hoping.
He says that is because the official modelling is counting on big improvements to the way tax is collected.
“Treasury’s still of the view, and it may be right, that the tax system will get a bunch healthier in the next few years. In the last seven years, total revenue went up by an average of $17 billion a year. In the next three years, Treasury says it’ll jump to $30 billion a year, not because of a decision to tax more but because of underlying repair in the tax system.”
The Government is reportedly considering major cuts to university funding which could include a rise in fees for students.
The education minister is meeting with university leaders to discuss it.
The move follows a Government-commissioned report, also by Deloitte, that shows federal funding has risen faster than the actual cost of educating students.
Treasurer Scott Morrison says universities are banking the difference in profit.
“What I do know is, in the figures that have been released by the education minister today, that funding growth has been at 15 per cent, the costs have been growing at 9.5 per cent, there is the effective profit equivalent of 6 per cent for these institutions, but, for businesses at large, it’s at 1 per cent. So I think those three figures tell you something about the capacity, I think, for the sector to deliver better value, even better value, for the students.”
The Opposition has attacked the Government for raiding the education sector for savings, though.
Opposition Leader Bill Shorten says it is a question of priorities.
“No nation can be an innovation nation when you’re cutting funding to education. Why should university students have to pay much more to go to university at the same time as the Government is giving corporate tax giveaways of $50 billion over the next 10 years?”