A calm and controlled Budget
There weren't too many major surprises in the Federal Budget.
It was a relatively calm, controlled, and conservative affair.
The pledge to deliver 1 million homes between 2024 and 2029 attracted the media headlines, and even a burst of applause as the Budget was delivered.
As noted, however, this would be a relative step down from previous rates of dwelling completion.
Between December 2014 and 2019, well over 1 million dwellings were completed, for example.
Not too surprisingly, real GDP growth is expected to slow to 1½ per cent over the coming financial year.
No recession is forecast for Australia, but if we experience the 'downside' forecast scenario it might feel like recessionary conditions, as we'd potentially be going backwards in per capita terms.
Indeed, the Budget paper confirmed that the government will be running a very large migration programme, with net overseas migration of +470,000 expected over the next two years alone.
Add in the natural growth of the population (fertility rates rebounded last year) and the recent boom in international students (now tracking at around 45,000 applications per month) and we could comfortably see population growth of more than 800,000 over the next couple of years.
This puts the plan to deliver 20,000 to 30,000 affordable dwellings by the end of the decade into a somewhat different perspective.
The good news is that although power prices are expected to surge there wasn't too much in the Budget that's likely to contribute further fuel to already-high rates of inflation.
It was interesting to note that the cash rate target is forecast to increase to 3.35 per cent by mid-2023, which would equate to three further interest rate hikes of 25 basis points each if delivered.
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Inflation figures for the September quarter are due out this morning.
