(Image: AAP/Private Media)

The budget forecasts a huge temporary lift in payments (government spending) in the 2020-21 financial year, and those payments fade fast.

Government spending returns to around its old level in five years. In later years fiscal stimulus will still flow to the economy (i.e. we will be in deficit). But that will be thanks to lower receipts (i.e. taxes). 

The tax take as a share of GDP falls to its low in 2021-22. Pay attention to that shift from doing fiscal policy via spending to via taxes. It means the beneficiaries will change sharply. 

Peter Fray

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