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Can the Abbott government achieve its budget aspirations?

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The Australian federal budget delivered only a mild tightening of fiscal policy (with a deficit of $A30 billion forecast for 2014-15) and set the ball rolling on its long-term aspiration of returning the budget to a surplus of at least 1 per cent of GDP within a decade.

Most of the savings announced in the budget will impact beyond the next election due in 2016. The additional near-term tightening of fiscal policy contained in the budget will be quite modest but will increase from 2015-16, suggesting that this budget will be a mild headwind for the recovery in the non-mining economy that is now getting under way.

For additional details on the budget see Warren Hogan’s video Outlook solid, politics the issue with budget.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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