Stronger revenues and spending discipline will see a smaller deficit this year and a slightly bigger surplus in 2019-20, according to this morning's Mid-Year Economic and Fiscal Outlook, but workers face another year of wage stagnation as the government again cuts its wage growth forecasts.
It's a strong set of numbers for the government, though likely to be entirely overshadowed by another Nationals sex scandal and the sudden resignation of Andrew Broad this morning. But this year's forecast budget deficit of $14.5 billion has reduced significantly, and is now expected to come in around $5 billion, while next year's forecast surplus has nearly doubled to $4.1 billion. That's been fueled by substantial upward revisions to revenue: this year's revenue is up another $9 billion since May; next year's forecast is up $2 billion as well. That reflects stronger terms of trade -- now expected to edge up 1.25% in 2018-19 instead of falling more than 5%, although Treasury now expects a marked deterioration in 2019-20 of 6%.