DELOITTE: Canberra Doesn't Determine Australia's Budget Outcome, China Does

Deloitte Access Economics says the new Federal Government shouldn’t be too specific with its promises to deliver a budget surplus because of the huge effect that China has on Australia’s balance sheet.

Chinese data releases have a palpable effect on Australian stock market on a day-to-day basis, thanks to the huge volume of trade between the two countries.

Should Chinese demand for Australian exports fall, so too will company revenues and consequently Australia’s tax revenues.

According to Deloitte:

It doesn’t really matter what taxation system we have here in Australia – if China has a bad year, or even if it simply disappoints, then that sends a shockwave through the tax take.

[…]

The Prime Minister has noted that the Government would return the Budget to surplus “at least as early” as the last government was promising to do … it’s a promise that is hostage to conditions in China, over which Australian governments have no control.

Deloitte acknowledged in its latest Budget Monitor report that the the Government was challenged with talking up the economy to boost confidence, while talking down the budget to help it justify some necessary reforms.

Here’s what Deloitte has forecast for Australia:

Now read: Stronger China Data Doesn’t Always Help Australia, Because Bear Costumes Are Hard To Remove

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