Some of the structural changes occurring in Australia are starting to impact the budget more forcefully, particularly demographic changes. The Parliamentary Budget Office has released some updated estimates of how significant that drag will be, particularly over the next decade.
And the political dynamic around that issue has become more interesting with voters over 50 now accounting for nearly half the voting public.
There's also a dawning sense that some of the “new normal” economic outcomes globally - structurally lower interest rates, structurally lower income growth and structurally lower GDP growth - are starting to be manifested more forcefully in Australia yet the longer term budget projections are still based off an economic profile which takes averages over the last few decades. So that's going to bring some pressure to the budget over the next few years as well.
While the focus will probably be on tax cuts, it's this idea of peak budget which is the most significant.
What we're likely to see now is rather than positive surprises in the budget being saved - to be passed through the bottom line - they're going to be spent. That brings a negative symmetry to the budget we haven't seen before.
Watch the video above to learn more.
You can read bluenotes’ full coverage of #Budget2019 HERE.
Richard Yetsenga is Chief Economist at ANZ