CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Federal budget 2019: What it means for the Australian economy

Australia’s coalition government has announced the federal budget for 2019-20, with forecasts of a $7.1 billion return to surplus.

If the forecasts eventuate, it would be the first return to budget surplus in over a decade.

Treasurer Josh Frydenberg has said the surplus is possible, even with current projections.

Mr Frydenberg says the budget plans for a stronger economy without increasing taxes. 'Our plan is shaped by our vales, and our values embrace all Australians,' Mr Frydenberg says.

'I am pleased to announce a budget surplus of $7.1 billion... a total of $45 billion of surpluses over the next four years,' Mr Frydenberg says.

The government announced a cash splash of tax cuts and funding for roads, rail and airports.

Low and middle-income earners

The government has pledged A$158 billion of tax relief for low to middle income earners. As of July 1, low and middle-income earners will receive a lump sum of up to A$1,080 a year.

The government also announced it will lower the 32.5% tax bracket to 30% from 2024-25. The tax rebate is for low-to middle income earners, or people earning between A$48,000-A$90,000 a year.

Budget papers showed the cost of the tax cuts out to 2021/22 would be A$15 billion. The government said it would also accelerate tax cuts for small businesses, with the tax rate for businesses with turnover of less than A$50 million cut to 25 percent in 2021/22

Economic Growth

The government has forecast full-year economic growth of 2.25% in 2018/19, which would mean activity would need to pick up in the January-to-June period, as the economy grew 0.3% in the September quarter and 0.3% in the December quarter.

The government has forecast a budget surplus of A$7.1 billion in the fiscal year ending June 2020, up from a December forecast of a A$4.1 billion surplus.

The projected surpluses increase to A$11 billion in 2020/21 and A$17.8 billion in 2021/22 before easing to A$9.2 billion in 2022/23.

Economic growth is forecast to 2.75% in 2019/20 and 2020/21.

If enacted, tax cuts and increased spending, could offer a boost to the economy, with consumer spending and falling home prices and high debt levels weighing on sentiment.

Infrastructure

The government has also promised $100 billion on roads and rail over a decade. The $100 billion is projected over the next 10 years, with $42 billion to be spent over the next four.

Financial market reaction

Financial markets are fully pricing in a 25-basis points rate cut later this year.

Analysts say the reaction to the budget in markets has been minimal. Interest rate markets were largely unchanged with more reaction to the RBA.

SPI futures contracts indicated a gain for the ASX200 in early morning trading.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Be ready to act on ECB opportunities

Learn how the ECB’s monetary policy announcements affect interest rates and price stability ahead of its next meeting in 22 April 2021.

  • How might the next meeting affect the markets?
  • What are the key rate decisions to watch?
  • Why is the Governing Council announcement important for traders?

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.