Monthly budget data for Apr-19 released today showed the Commonwealth General Government budget position already materially beating the Budget released on April 2, 2019…allowing for seasonality (etc), the Govt said the UCB is tracking $1.9bn better than expected (in just one month). UBS thinks the recent surge in iron ore prices suggests further improvement is likely in May & June.
Implications: better budget could allow room for more household tax cuts The better than expected budget position is a material positive surprise. In assessing the bull vs bear case for the outlook, we highlighted that if higher than expected iron ore prices were to be sustained, the budget position would likely be $10bn+ better than expected in 19/20. Indeed, the better starting point in 18/19 reinforces this view. While the new Government has not given any indication of a policy position, this potentially allows room for further fiscal stimulus – such as another significant round of household tax cuts…
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
