Via the excellent George Tharenou at UBS:
Treasurer Frydenberg will soon release the Commonwealth Budget update (MYEFO), likely on December 16. Positively, the Final Budget Outcome for 18/19 already beat April’s Budget estimate by a significant $3.5bn (UCB basis), with the $0.7bn deficit outcome (i.e. ~’balanced’) the smallest since the GFC. Furthermore, monthly data for 19/20 so far (up to Oct-19) is tracking broadly in line with the Budget’s implied monthly profile, which underpins their assumed path to a $7.1bn surplus. But negatively, the deficit in the first 4 months of the YTD is still large at $14.7bn, similar to last year.
Hence, the Budget assumes in the next 8 months a material $22bn improvement; which is a much larger than normal ‘seasonal’ lift; albeit partly reflecting the pullforward of tax refunds that ‘roll off’ in the rest of 19/20. This suggests MYEFO has little scope for an upside surprise/beat (vs the Budget projections); and hence there is limited room (if any) for further fiscal stimulus, without deteriorating the forecast surpluses.
