I hear you, WTF is a MYEFO?
MYEFO is the mid-financial year release of the federal government’s economic and fiscal outlook. It is an update of the budgetary position.
Basically it highlights the blow-outs from the “main plan”, which is released in budget week in May each year.
Think of it like this… all those sneaky little purchases you made at Gorman a few months ago that you thought would not count but came to bite you on the credit card bill right before Christmas? That is MYEFO for the government.
It takes account of all decisions made since the release of the May budget which affect expenses and revenue and therefore it revises the budget aggregates.
Yesterday the Treasurer announced Australians are on track to inherit a national debt equivalent to $30,000 per person, with the interest bill to pay for it blowing out to $15 billion next year.
Announcing an increase of $2.3 billion in this year’s deficit to $37.5 billion, Treasurer Scott Morrison and Finance Minister Mathias Cormann said, while the budget was still in need of repair, the economy was heading in the right direction.
They said spiralling debt, growing deficits and lower economic growth were to blame for the extra debt.
But DON’T PANIC as we are headed in the right direction, the new Treasurer Scott Morrison has assured the nation.
In fact, in an amusing and captivating analogy he says the whole thing is kind of like going on a family road trip at Christmas.
“As we go into this summer season and Christmas season, many Australians will jump in the car and they’ll head off to their favourite holiday destination,’’ he said.
“They know where they’re going and they know how to get there. There are no shortcuts; there may be some delays on the way with road works or things like this, there will be plenty of people in the back seat … saying ‘Are we there yet? Are we there yet? Are we there yet?’
“That’s natural. But our path back to budget balance is very similar to that. We need to take a very safe and careful route and one that does not put at risk the very important objectives we have on growth and on jobs.”
Thanks Treasurer, that does really help to put it into perspective. Thanks for setting our expectations so low. We all know the pain of a long drive with small children. Personally I would rather stab myself in the eye with a pencil.
But back to MYEFO and why it is not PERFECTO.
GDP growth predictions since the May budget have been cut from 2.75 per cent this year to 2.5 per cent and the following year from 3.25 per cent to 2.75 per cent.
The budget deficit for this year has blown out $2.3 billion to $37.4 billion since the May budget, with the fiscal imbalance blowing out a further $26 billion over the four- year estimates. A return to surplus has now been put back a year, to 2021.