The slow down in China’s economic growth has eaten further into Australia’s national budget.
The budget deficit is now expected to be at least $5 billion bigger than forecast this financial year, according to the latest estimates from Deloitte Access Economics.
The economists predict an underlying cash deficit of $40.3 billion in 2015-16, about $5.2 billion worse than projected at the budget in May.
This is worse than the $37.9 billion deficit in 2014-15.
The official Treasury estimates will be revealed mid December when the MYEFO (mid year economic and fiscal outlook) is released.
And the economic growth outlook will be revised down 2.75% from 3%, according to Treasury deputy secretary Nigel Ray who outlined the changes in forecasts at a business economists conference this month.
Deloitte Access Economics says China keeps making Canberra’s task harder by generating revenue writedowns.
“Our forecasts trim official expectations on wage and job growth,” says Deloitte Access Economics.
Deloitte Access Economics says China’s slowdown, falling commodity prices and weak wage growth will cut government revenues by $4.6 billion in 2015-16.
The shortfall on the tax take from individuals will be as much as $2 billion in 2015-16, rising to $2.5 billion in 2016-17. Profit taxes down by $4.4 billion in 2015-16, rising to $7 billion in 2016-17.
“Don’t underestimate how tough this is,” says Deloitte Access Economics. “The budget boom of the past decade continues to become a budget bust.”