And as predicted, it’s a surplus with a smile. Even if that surplus is $400 million smaller than expected at $1.1 billion. Forward estimates have the surplus down from $7.5 billion to $6 billion in 2015-16.
And now for the happy part: the assumptions. GDP is forecast to be 3% in 2012-13, which is down 0.25% from May and on the happy side of reasonable. But the same is forecast of 2013-14 which is silly unless housing takes off. Unemployment at 5.5% for the next two years? I think not.
The terms of trade are forecast to fall 8% this year, up from 5.75%, and in line with my estimates this morning and banking on no further deterioration, which is probably fair enough, at least until May.
The big cuts were to the baby-bonus, which was reduced to $3000 on the second child. The perfectly insane slashing of research budgets by half a billion over the forward estimates. And companies must now pay tax quarterly so no interest income for you!
