NOT SURE The budget expenditure is not itself especially inflationary. Various other factors, notably interest rates, import prices and the exchange rate also influence inflation. In any case, the RBA target band of 2%-3% is an arbitrary target. What matters is incomes relative to prices. While lower inflation rates are preferred, inflation of 3% to 3.5% may well be compatible with increasing real incomes.

B

This is a well-balanced and responsible budget that provides important though modest social income support for individuals in need and funds for important social services. The budget expenditure will assist employment and output without creating significant excess demand.

YES On balance, I see the budget as aligned with the objective of getting inflation back within the RBA comfort zone. Obviously, this is not the only objective driving the design of the budget, so there is a wide "confidence interval" around my forecast.

B

The government is attempting to balance providing cost of living relief to households against managing inflation at a time of soft economic growth. Its pragmatism is evident

YES Barring further adverse shocks from overseas the trend towards lower inflation should continue and bring inflation down from the current 3.6% to somewhere between 2% and 3%. Current wages growth of about 4% is consistent with this outcome, provided there is a pickup of productivity growth from historically low levels or a decline in profit margins from historically high levels.

A

Treasury estimates of a half-point reduction in inflation for the coming financial year due to electricity subsidies and increased rent assistance are credible, allowing them to simultaneously provide cost-of-living relief and bring down measured inflation. Payments indexed to the consumer price index will be lower in the following years as a result, helping the budget balance and reducing inflationary pressures. Increased support for skill formation and targeted industry support will contribute to growth in the medium term.

NO The projected future budget deficits will place upward pressure on bond rates. This will pressure governments to do more to keep short-term rates low. But the temporary effects of subsidies are just that ? temporary.

D

In the good cyclical years, such as with terms-of-trade gains, you focus on (1) reform, and (2) doing no damage 1. Reform: If we don't do tax reform in the good years, when will we? 2. Do no damage: A: The proportion of household spending on energy is higher (to a huge degree) in low-income groups. Giving it to all groups is wasteful, worsens income distribution effects, and undoes part of the inflation gain. B: Subsidising fossil fuels for everyone works against the government's climate change aspirations. Letting those wealthier families adjust to the full brunt of energy prices is the better policy. Lump sum cheques to poor households only would be better, as an example C: Future budget deficits do not allow for rainy days and can be inflationary if there are attempts to stop interest rates fully reflecting the implications of borrowing. D: The problem with off-balance sheet liabilities in the budget is that they can easily come back to bite you through a variety of rainy-day scenarios.

YES This is not an inflationary budget, so from that perspective, Chalmers has done quite well. This is why I gave it a C rather than a D.

C

While some of the policies in the budget are sensible, there are longer-term issues that are not addressed, decarbonisation and the environment being the principal ones. It is clearly a budget designed to give Labor a second term at the next election and let's hope that ? if successful ? it takes some action on important longer-term issues ignored in this budget.

NOT SURE A significant part of inflation in Australia is determined by events overseas (such as what happens to monetary policy in major economies such as the United States and Eurozone, and shocks to supply chains and oil). Inflation has come down in the US significantly, but it remains to be seen how events in the Middle East and geopolitical fragmentation develop in the future.

B

NOT SURE The budget measure for defraying energy costs will reduce measured CPI and the amount of additional spending is relatively modest. On balance, that ought to reduce inflation. But there are factors outside the budget that impact measured inflation, and how they will play out remains to be seen.

C

The budget is unlikely to compromise the task of winding back inflation. But the money spent on assisting with the cost of living could have been better targeted to help those Australians in greatest need.

NO The untargeted $300 subsidy is a fiscal stimulus that only increases aggregate demand and pushes up inflation overall. In this sense, the budget is confused about the economics and what we are trying to do in getting inflation under control. The short-run reduction in the consumer price index (via electricity in the consumption basket) will eventually show up later with a rise in the same part of the index when the subsidy is removed.

D

The government has provided fiscal stimulus during inflation through an untargeted electricity bill subsidy. The government is also taking steps to stem one of our most important drivers of productivity ? skilled migrants ? which, in the medium to long term, will hinder economic growth prospects. So, I'm not sure how this budget is meant to fight inflation and promote economic growth.

NO I need to qualify my answer. "No" in this case means that whether or not inflation goes back to target might not depend on this budget. Other domestic and international factors are at play which might have greater weight in the short term. Certainly, if we do the maths, the measures announced by the treasurer will add somewhat to inflationary pressures. But persistent international instability and its effect on energy prices is likely to have a bigger (downward) effect in my view.

C

This is a budget that seems to have tried to strike a compromise between providing some cost of living relief and managing public finances, with of course an eye to next year's election. Achieving such compromise is always going to be difficult and the budget achieves that only to some extent. Overall, the cost of living package could have been better targeted, although one has to be realistic about the feasibility (and administrative cost) of means-testing. The cap on international students, without further details on its implementation, is equivalent to a cap on exports in a sector where domestic demand clearly does not exhaust supply, meaning it is easily supplied. If the concern is the impact that international students have on the housing crisis, then I would say it is the wrong perspective on the crisis. Finally, the budget fails to deliver a vision for the long-term future of Australia. The words "Future Made in Australia" are mentioned frequently in the budget, but it lacks a coherent and consistent framework to support innovation and (true) entrepreneurship.

YES The energy package is very smart because it simultaneously subsidises electrification while reducing inflation.

B

It is a responsible budget and quite creative in regard to the energy package.

NOT SURE On balance, the budget added to underlying inflationary pressures but will mechanically reduce headline inflation through electricity price relief. The key question is whether the labour market holds up as projected, or whether recent large job cuts point to a weaker economy.

C

The budget provided important support for those facing cost of living pressures, banked some of the benefits of higher tax receipts, and leant in on support for decarbonisation and Australia's energy transition. It was less concerned with addressing the longer-term structural deficit, could have looked to provide more support for those most in need, on balance added to inflationary pressures, and did not address important long-term challenges like reform of aged care.

NOT SURE The international economic environment continues to be very uncertain. How this resolves itself will matter for how well we do in achieving the RBA target inflation band.

B

I would have liked to see more support for those on Jobseeker.

NOT SURE The treasury forecast is consistent with the RBA May Statement forecast so long as (1) the accounting estimate that the cost of living relief package (which was not known to the RBA when it finalised its forecast) will reduce the consumer price index by 0.5 percentage points (ii) the package does not add to inflation. The first of these seems assured, the second is doubtful but any effect is likely small. That said, my sense is that economic activity in 2024 has been relatively weak and the trajectory of inflation returning to the RBA target band could well happen ahead of the RBA forecast of end-2025.

I have provided no grade because this is a facile way of judging a budget. My view is that this is one of the most consequential budgets in some years. It locks in a clear structural shift towards higher spending and revenue, at around 26% of GDP ? higher than any other period when the Australian economy has been at or near full employment. The industry policy initiative is the most marked intervention by a government in shaping the future direction of the economy for decades. The medium-term growth prospects for the economy are uncertain. They depend on what happens to productivity, a topic that did not get much of an airing in the budget.

NOT SURE

C

The cost of living crisis could more accurately be called the real wage crisis, with the wage price index only just nudging ahead of the consumer price index for the first time in almost 3 years. This is symptomatic of low productivity growth. More government spending won't be helpful (except where it has a redistributive effect) and a greater emphasis on productivity and housing would have been welcome.

NO The budget outlays are too high.

E

The budget has obvious stimulative characteristics

YES The economy is slowing much faster than most economists think, especially those advocating two to three cash rate increases. Any stimulatory effect of the budget deficit is likely to be swamped by the economic slowing that is already well underway.

B

The cost-of-living measures were needed, and targeting tax concessions at the energy transition is smart and less costly than providing them on an economy-wide basis. Further savings measures will be needed in subsequent budgets.

NOT SURE

C

NOT SURE Economic forecasting is subject to considerable uncertainty, including whether inflation by the end of 2024 will fall to the RBA band. Some of the estimated 0.5 drop in the consumer price index attributed to the electricity subsidy and increase in rent assistance subsidy will be offset by the second-round enhanced-income spending effect. Another important source of uncertainty is how increases in nominal wages combined with low productivity growth flow through to higher product prices.

D

For the near term, the forecast budget surplus for 2023-24 and the small deficit for 2024-25 is consistent with the Reserve Bank's and state government's macroeconomic objective of reducing the rate of inflation at the cost of a small increase in unemployment. On the other hand, the budget includes proposals that will not contribute over the medium term to required national productivity growth and to resolving the structural budget issue of expenditure increasing as a share of gross domestic product. The Future Made in Australia idea of "picking winners", supplements to the GST payments to the states and territories, and the lack of interest in resolving overlaps of expenditure programs between the states and Commonwealth on education, health, infrastructure and so forth are examples of policy shortfalls. Social equity objectives are more directly and efficiently met via changes to social security payments and the progressiveness of the income tax system than selected industry subsidies.

NO The budget forecast is for headline inflation, not the trimmed mean that the RBA might use to assess where monetary policy needs to be. Inflation ? both headline and underlying ? is falling but has some sticky elements including rent. Should core inflation return to target faster than the RBA forecasts, it will be primarily due to factors other than government decisions on spending and tax.

D

While delivering a second surplus, the budget overall will not "fight" inflation. Any temporary easing in the headline rate will be less relevant to the Reserve Bank than the associated stimulus effects, although the latter will likely be marginal and come when consumer demand is on life support. Means-tested energy efficiency support, which permanently reduces energy bills, would have been a better option. Rent assistance may provide more permanent downward pressure, as long as landlords don't try to absorb it. This will be a temptation that's difficult to resist given ultra-low vacancy rates. On the medium-term growth outlook, the industry policy has some sensible elements, supporting critical minerals and green hydrogen which are crucial for the transition to net zero. However, subsidising solar panels is unnecessary and a waste of precious resources. Crunch time for some type of tax reform is coming, given the large baked-in spending items (defence, health, NDIS etc) as well as over-reliance on direct taxes. It's a shame that politics makes the reforms we need so difficult to deliver.

NOT SURE

C

It's not all about inflation. There are opportunities (not taken) for fiscal and other reforms to boost productivity, address deepening unequal income distribution and increase revenue while addressing externalities. Reducing or eliminating negative gearing and fringe benefit tax exemptions, increasing welfare payment rates, and ending the fuel excise exemption in agriculture and mining come to mind. Such opportunities are habitually missed in federal budgets.

YES Inflation forecasting is always uncertain, but the weakening of the economy means that there is a better than even chance that the inflation forecast will be met.

B

It is a competent and well-balanced budget, but hardly inspired.

NO The budget is quite expansionary on both the spending side and the tax side.

E

There is too much spending on projects on and off budget that is unlikely to deliver a worthwhile social payoff. The proposed outlays on green hydrogen and quantum computing are just two examples.

NO This budget was not about fighting inflation. It was a budget with an election in mind. The budget seemed to be produced with detailed election polling in mind. There is a handout for every identifiable voting group. It gives the government the flexibility to launch an election campaign almost any time in the next year. This is important because the major economic parameters shown in Budget Paper Number 1 tell us the economy is softening. The projected GDP growth for 2023-24 is only 1.75%. This is down from 3.1% in 2022/23. As a result, unemployment is expected to climb to 4% in the middle of 2024 and 4.5% by the middle of 2025. It is forecast to stay at that level for three consecutive years to the middle of 2027. This extended period of higher unemployment may eventually reduce inflation. Still, the government will want to call an election before this period of higher unemployment sets in.

C

A federal budget surplus of only 0.3% of GDP in 2023-24 followed by a deficit of 1.0% in 2024-25 provides little fiscal support to the RBA in its task of putting downward pressure on inflation. Hence we don't believe the RBA will be able to begin lowering rates until the first half of 2025.

NO The consensus view is that consumer price inflation is more likely to be close to, but still above, the top of the target band which is 3%. The underlying causes of inflationary pressures ? a tight labour market, excess demand, and high profits ? have been quite persistent.

B

The focus of the budget is on the near to medium term and in this regard it has prioritized issues that matter to many Australians, easing cost-of-living pressures, building more homes, paying attention to health care and education and skills and promoting inclusive growth. The weak part of the budget is that it is unclear whether the planned investments will yield rates of return that exceed the real growth rate and thereby lift the standard of living. A more balanced approach would also have considered the problem of a structural deficit.

NOT SURE The budget has clearly addressed some of the most evident effects of inflation, including those related to a malfunctioning and largely unequal rental market and the inadequacy of wages to cover subsistence consumption. These measures will not force inflation upward or slow down its return to 2-3%. However, the budget appears to respond to the effects rather than to the root causes of these problems. This is evident in the case of the housing and rental markets. Reflecting on the contribution of the budget to getting inflation back on track, it is worth noting that supply-side factors have contributed at least as much to inflation as demand-side factors. In so far as regards the supply-side factors fueled by war-triggered energy crises in Europe, investment in Australian renewable energy sources should contribute to the resilience of the economy. However, there is little in the budget that systematically recalibrates other supply-side factors, including those that flow from the market power wielded by large corporations.

C

The budget hints at some important transformations of the Australian economy future policies will need to embrace courageously. Inflation has revealed the over-exposure of many groups in our societies to energy and supply side shocks, from low-income families to young people to participants in the rental market. This acknowledgment is important. The budget proposes a set of well-calibrated reactive measures to respond to the challenge. However, there is little that suggests a more proactive stance to persistent problems from real estate prices to the funding of public schools to the poor performance of Australian firms in terms of research and development investments. This is concerning, particularly because the budget framers say it is intended to create growth opportunities in the medium term.

YES I think inflation will continue to fall in accordance with its current trend.

D

This is a disappointingly timid budget given that the same party is in office federally and in almost all states and territories. It offers small measures including increased pay for childcare workers and a minor adjustment to student debt. But it has left out many measures that are standard in other countries, among them free childcare, school, higher education and health care, and half-decent welfare payments. The $27 billion over several years devoted to Future Made in Australia is also piecemeal, worth a couple of new freeway sections. What is needed is a big push that integrates research and development, innovation and application in a context where the risk and reward are publicly borne. This can be done by fully funding the CSIRO and universities for research, and integrating what they do into the industry transition as is done in other countries, including the electric car industry. Why worry about budget deficits and surpluses that are worth such a small proportion of the budget and are evidently challenging to forecast? The large deficit after COVID failed to eventuate. It is a mystery that deficits are even forecast over the next few years, tax cuts notwithstanding. Inflation is actually pretty low in the scheme of things and is an outcome of trade and supply chain issues, affecting those on lower incomes the most. The central issue of housing affordability also needs vision and was at least given its own section in the budget.

NO The technical measurement of inflation might come within the band, but the budget is maintaining excess demand in the economy, and thus, underlying inflation will likely be above the band. The Reserve Bank will see through this and likely raise interest rates to where they should be.

D

The Australian economy's main problems are the lack of productivity growth and the need to deal with large structural changes due to the energy transition, the surge in artificial intelligence, a possible loss of the terms of trade surge, and global geopolitical uncertainty. Budget policy should not focus on whether inflation will be 2.9% or 3.1% in December 2025. The real problems facing the economy are orders of magnitude more important than the political problems the government faces leading up to the next election. The budget contains way too much spending and distortionary taxation, which can only be sustained if the terms of trade boom continue. Macroeconomic resilience is more important than production network resilience, yet there is no focus on it. I didn't hear productivity mentioned in the Treasurer's speech. What should have been done, given the scale of the problems the Australian people face, was first to focus on the market failures and/or government failures that have prevented the economy from adapting sufficiently to the major global risks that are obvious. The policies should then be focused on fixing the problems at the lowest possible cost of adjustment. There is clearly a role for the government in first fixing its own distortionary policies (such as subsidies to fossil fuels) and then addressing problems when markets fail. The most significant hurdle to overcome is the lack of bipartisan political consensus on crucial issues, which is stifling private investment. It is imperative to prioritise a collaborative approach, engaging with the opposition to develop a bipartisan strategy for tackling these major issues. Any other approach would be a suboptimal solution. Without any consensus on overall policy, most budget policies will be reversed when there is a change of government. This reversal will be a waste of taxpayers' money and delay major adjustments. In the absence of consensus, the budget fails to capitalise on potential opportunities. It overlooks the potential benefits of substantial tax reform, labour market reforms to enhance flexibility, and major investments in education to equip future workers to adapt to rapidly changing circumstances. These reforms could have a significant positive impact on the Australian economy. I would give the budget an F, but the budget could have been much worse given the role of corporate lobbyists, union officials, and foreign intellectuals in promoting "a new exciting role for government" in setting the government's agenda.

NOT SURE Although inflation pressures are easing and the budget measures will help mechanically reduce inflation, we live in a highly uncertain world. Factors such as climate change, geopolitical pressures, and unforeseen shocks continue to influence the economic landscape.

C

The budget entails a complex web of economics and politics. Its complexity reflects the challenges of striking a balance between fiscal responsibility, avoiding a resurgence of inflationary pressures, and addressing spending demands arising from the imperative to accelerate the energy transition, confront geopolitical priorities, and promote a fairer society. The budget acknowledges that these challenges are mounting, partly due to the increasing complexities of the world. However, the budget's effectiveness in addressing these challenges is limited. It represents a compromise solution ? a 'second best' approach. For instance, the provision of a $300 energy rebate to all Australian households, while mechanically reducing inflation according to how inflation is calculated, is unlikely to alleviate underlying inflationary pressures and may even exacerbate them. For households not experiencing financial strain, lower energy bills could simply lead to increased spending in other areas. The inclusion of production tax credits for green hydrogen and critical minerals refining and processing offers support to sectors where Australia likely holds comparative advantages, potentially increasing the nation's prosperity. However, a more comprehensive tax reform, such as the implementation of an allowance for corporate equity, [https://taxpolicy.crawford.anu.edu.au/sites/default/files/publication/taxstudies_crawford_anu_edu_au/2022-03/complete_ace_wp_2022.pdf] would encourage efficient investment across the entire economy rather than focusing solely on chosen industries.

NO The RBA has a 2%-3% target band for the annual consumer price inflation. In 2022-23 the consumer price index to the June quarter climbed 6.0% The 2023-24 forecast is for 3.5%, falling to 2.75% by June 2025. The Government is banking on its energy bill relief and Commonwealth Rent Assistance and a softening labour market to achieve these forecasts. There are, however, a number of inflationary dimensions to this budget including the tax cuts and it is not clear that inflation expectations are yet anchored in the 2-3% band. My prediction is inflation will continue to ease, but not as quickly as predicted.

B

The budget has received a mixed reception. It includes support for low-income families as well as funding to improve women?s health and safety, funding to pay superannuation on publicly funded paid parental leave, and funding to support higher wages for aged care and childcare workers. Other welcomed announcements are the ?prac payments? payments for students doing mandatory placements in fields such as teaching and nursing and a decision to reduce the indexation of student debts ? although some may argue that the latter does not go far enough. The budget is also big on vision with $22.7bn to be invested over the next decade to create a ?Future Made in Australia? with the bulk of the funding earmarked for the manufacturing of clean energy technologies, renewable hydrogen, refining, and the processing of critical minerals. On the downside, the budget initiatives in concert with tax cuts risk stoking inflation and also point to structural deficits going forward. Future governments will have to deal with this fiscal imbalance ? meaning some hard policy decisions will be required. Wealth tax? Inheritance tax? Higher GST?

NOT SURE Australia, being a small open economy, is particularly susceptible to domestic and external shocks, leading to significant volatility in inflation. With the prevailing global economic uncertainty compounded by climate-related challenges, forecasting the trajectory of inflation over the next six months, let alone the next year becomes an exceptionally challenging task.

C

The budget, which appears to be a broad brush, lacking a clear target or concreteness, presents a challenge that could hamper its effectiveness. Its populist leanings, prioritising short-term appeasement, could potentially jeopardise the economy's resilience in the face of future challenges. The attempt to tackle the pressing issue of cost of living pressures and to contain inflation simultaneously demands a delicate balance, which, if not managed carefully, could exacerbate rather than alleviate economic strains.

NOT SURE The measured rate of inflation will depend on which categories in the consumer price index basket have lower price changes. There are a number of factors that can affect price changes that are not under the control of the Australian government, including shocks that could arise from international factors.

B

The budget targets a few key areas that will have an effect on the measured inflation. The consumer price index, the most common measure of inflation, measures the price change of a basket of goods and services (such as food, housing, health, transport and so on). The relative weights used for each of these categories impact the final outcome. A number of budget measures will either directly or indirectly result in lower prices of some of the items in the basket. Lower measured inflation can also impact expectations, which are known to themselves drive inflation.

NOT SURE Whether lower inflation can be sustained ? given the other expansionary components of the budget (such as the Stage 3 tax cuts) and the inevitable bounce back in energy bills after the relief payment period ends ? we will have to wait and see. There are still some items in the CPI basket where inflation is still notably high, such as insurance which rose by 16% over the past 12 months. We have to question how much more heavy lifting could fiscal and monetary policy do to counter these price rises and bring down economy-wide CPI, if other pricing factors are at play in these particular sectors.

B

On the specific goal to ?fight inflation in the near term?, the energy bill relief and boost in rental assistance will, mathematically, lower the measured consumer price index. On the other half of this goal, ?growth in the medium term?, the Stage 3 tax cuts and other expansionary investments will play a role. Indirectly, a range of other initiatives ? including progressing gender equity, skills and training, and creating a national interest framework to guide the energy transition ? were distinctive contributions of this budget that will matter for inclusive and sustainable economic growth in the medium and long term.

NOT SURE The only strictly honest answer I can offer is ?Not sure?. There is a clear case for ?Yes?. The combined actions of the government and the RBA have already succeeded in putting inflation on a downward trend. And the budget?s measures on energy bills and rent assistance will engineer a sizeable reduction in the headline inflation rate ? as will the resulting reduction in inflation-indexed social security increases. Moreover, since I expect the RBA to base its own decisions on underlying inflation rather than this one-time engineered reduction in the headline rate, I do not expect a near-term reduction in the RBA cash rate and any consequent inflationary stimulus from such an interest rate cut. On the other hand, there is also a case for ?No?. First, there is clearly an inflationary stimulus from the Stage 3 tax cuts that will start to build up steam. And at some point ? perhaps already in the 2024-2025 fiscal year, perhaps later ? the deficits projected in the budget could well become real deficits ? as distinct from being deliberately pessimistic forecasts by the treasury, as I argued in regard to last year?s Budget, citing Chris Richardson on this point. The rivers of gold that flow into the treasury?s coffers through high-volume exports at advantageous terms of trade spring from the rising prosperity, and consequently rising effective demand, of people in other lands, in China and India and elsewhere. In an increasingly turbulent, conflict-ridden geopolitical and geo-economic landscape, these rivers may cease to flow quite as fully as they have to date. Hence, my answer: ?Not sure?.

C

To be precise: the C grade in answer to this first question is the composite of a B grade in regard to the first objective of ?fighting inflation in the near term? and a D grade in regard to the second objective of ?growth in the long term?. And the B grade in regard to the first objective is itself the composite of an A grade in regard to the fiscal year ending in June 2024 and a C grade in regard to future years. First, credit where credit is due! In the May 2023 poll in response to the 2023-2024 budget, I was ?more than happy? to award an A grade to it on the specific question of its effectiveness in keeping inflationary pressures in check. I am more than happy to do the same for this Budget ? and for just the same reason. As I said last year, ?our most immediate and demanding economic challenge is to reduce inflation without triggering a recession?. Meeting this challenge requires a scalpel, not a sledgehammer: that is, delivering modest Budget surpluses, by way of saving part of the revenues flowing from our advantageous terms of trade and enabling the Reserve Bank to maintain interest rates at a modestly elevated level. The treasurer has succeeded in meeting this challenge. In stark contrast to the 14 years between July 2008 to 30 June 2022, he has delivered two budget surpluses in a row, exerting a slow and steady downward pressure on inflation without triggering a recession, and enabling the Reserve Bank to maintain modestly elevated interest rates. Today's real cash rate (adjusted for inflation) is above zero but less than 1%. In regard to the future years forecast in the forward estimates, I am more sceptical of the likelihood of success. For 2024-25, the treasurer has proposed a clear enough strategy: reducing the headline rate of inflation by way of subsidies to reduce energy bills for all and subsidies to reduce rent payments for those tenants in receipt of Commonwealth Rent Assistance. He has also projected a cumulative budget deficit of well over $100 billion for the four fiscal years from July 2024 to June 2028. But since all this is the subject of the second question in this poll, I shall not duplicate my answer here. In awarding a D grade to the Budget in regard to the second objective of ?growth in the long term?, I am being polite to a fault. This Budget does not contribute to securing growth in the long term. As I have argued on many a previous occasion, the Australian economy, apart from its highly successful and high-productivity resource extraction industries, is not currently configured to deliver long-term growth. Too much capital is diverted from the productive economy as a result of the high share of bank lending allocated to the process of bidding up house prices ? as well as the high share of government spending allocated to cleaning up the results of repeated crises and seemingly systemic institutional failures in education, health, childcare, aged care, and other essential services. In lieu of addressing this vast and well-trodden territory, let me address the one major new initiative announced in this budget specifically on the issue of long-term growth ? the 10-year, $22.7 billion programme called ?A Future Made in Australia? ? see https://budget.gov.au/content/factsheets/download/factsheet-fmia.pdf ? and prefigured in the prime minister?s speech on ?Australia as a renewable energy superpower? that formed the subject of our March 2024 poll ? see https://www.pm.gov.au/media/hunter-nexus-dinner. In my answer to our March 2024 poll, I wrote: ?The point, however, is that any new multibillion-dollar initiative needs to be (a) founded on an accurate understanding of the nature and modalities of the energy transition that is actually being progressed across the world (including in such ?minor? countries as China and India, the former ranking first and the latter ranking third in their share of world GDP as measured by purchasing power parity, and neither of which was deemed worthy of mention in the Prime Minister?s speech), and (b) sufficiently well-crafted, and informed by a sufficiently-wide consensus, to be sustainable beyond the next 10 months in the case of the United States and the next 14 months in the case of Australia.? The point applies equally to the proposals and commentary provided in this Budget. First, in order to establish who is and who is not a current and potential major player in the field, consider the current global distribution of economic output and industrial and technological capacities. Of course, the United States remains a colossus. But according to IMF data, the combined share of global GDP accounted for by the three core countries of the so-called BRICS+ group of less-developed nations ? the Russian Federation (2.95%), India, (7.86%), and China, (19.01%) ? already account for a greater share of world gross domestic product than the ?major advanced economies? in so-called G7 club, at 29.64%. See here: https://www.imf.org/external/datamapper/PPPSH@WEO/OEMDC/ADVEC/WEOWORLD And according to the April IMF World Economic Outlook, whilst the United States succeeded in growing its GDP at 2.5% in 2023, none of the others in the G7 group of advanced economies managed any more than 1.1%. In contrast, the Russian Federation grew at 3.6%, China at 5.2%, and India at 7.8%. See here: https://www.imf.org/en/Publications/WEO/Issues/2024/04/16/world-economic-outlook-april-2024, at the statistical appendix, tables A2 and A4. The same applies ? indeed, it applies more strongly ? if we consider metrics of industrial and technological capacities, including basic metrics such as the number of engineers and engineering graduates. In regard to the energy transition, it must surely be obvious that China holds a dominant position. According to one estimate, from the Griffith University?s Asia Institute, in 2023, China held a 68% share in electric vehicles, a 74% share in lithium batteries, and an 86% share in solar modules. See here - https://news.griffith.edu.au/2024/05/09/chinas-new-three-exports-dominate-the-2023-global-green-transition/ Importantly, my point on industrial and technological capacities when considering potential major players comes into play here. For example, whilst China will surely continue to maintain a dominant position, the decisions by India and the United States to invest in solar module production on a serious scale are expected to result in these two countries greatly expanding their global market share ? not so much at the expense of China as much as at the expense of everyone else! See here: https://www.asiafinancial.com/china-to-dominate-global-solar-supply-chain-for-next-decade. Finally, it is necessary to interrogate and understand the rationale informing the actions of both major and minor players in the field. If the German and UK governments are now opening up coal mines, it is not necessarily in the belief this will hasten the transition to Net Zero. If the US Government is imposing a 100% tariff on Chinese electric vehicles, even as it draws down its Strategic Petroleum Reserve to keep petrol prices low at the pump, it is not simply in the belief that this is the fastest route to decarbonising passenger transport. In short, there comes a time when ?green-washing? old-fashioned geopolitical power plays simply will not wash! And that time might well come soon, if President Biden?s green-washed trade war were to be replaced in January 2025 by what would simply be President Trump?s trade war. Of course, on the basis of a more accurate understanding that the parallel processes of the energy transition and the trade and economic wars are accelerating de-globalisation, there remains much to do in securing Australia?s national interests and in pursuing ambitious but achievable goals in this new global landscape. And at least some of the expenditure itemised in ?A Future Made in Australia? are indeed relevant to the pursuit of achievable goals: ?investing $566 million in open science by supporting Geoscience Australia to map Australia?s endowments of critical minerals and national groundwater systems? and ?undertaking a strategic examination of Australia?s research and development (R&D) system? are two obvious examples. See here: https://budget.gov.au/content/factsheets/download/factsheet-fmia.pdf. Nonetheless, I maintain that an accurate understanding of current and future global trends would deliver a strategy for an achievable Australian future rather different to that outlined in ?A Future Made in Australia?. But this is certainly not the place to expand any further on the subject.

NOT SURE Private demand is forecasted to grow at less than 2% in the financial year ahead and around 3% in the year after, so it is likely inflation will be cut back to under 3%. But predictions are hard. Especially the future.

A

The 2024-25 budget has been designed in a cautious manner, as cost of living support is not paid out in ways to boost demand in the private sector. The energy bill rebate included in the budget will be paid "silently" ? it comes in the form of a rebate so that consumers have lower bills to pay. This makes it different to an unconditional cash payout (such as a stimulus payment during the global financial crisis) that could be used for any purchases. The amount is only $300 per annum (10% of the 2004 Baby Bonus) or $2.6 billion. This total amount is less than half of a percent of what retail trade turnover is in a given year (https://www.abs.gov.au/statistics/industry/retail-and-wholesale-trade/retail-trade-australia/latest-release). The budget was also careful with the Stage 3 tax cuts, targeting them towards lower- and middle-income earners, which is laudable as it is for these groups that will feel the cost of living pressures most. Private demand is forecasted to grow below 2% in the next year and around 3% in the year after, so the economy is not predicted to be overheating. There are many other great measures in the budget, most notably the longer-term investments to facilitate the economy's green transition.

NO Measured inflation might mechanically and temporarily fall below 3% by the end of 2024 because of the fiscal measures, but the real drivers of sustained inflation reduction are hardly addressed in this budget.

D

This was a politically astute budget that will satisfy the Labor faithful and may generate a positive blip in its polling. Cost of living pressures will ease with proposed new measures like the reduction of the energy bills of all households, rent relief and cheaper pharmaceuticals. These will mechanically and temporarily reduce the consumer price index, but won?t address the causes of ongoing inflation, which the RBA will fully understand. While the government deserves credit for running fiscal surpluses last financial year and especially this financial year, the budget contribution to reducing underlying inflation is minimal at best. First, when adjusted for the business cycle, the budget has actually delivered a "structural" deficit in 2023-24, despite the headline claimed surplus. Second, the large fiscal deficit outlook in future years will likely undo any credit that the government might be given for reducing current inflation. The budget has given too little attention to stimulating productivity growth outside of the mining sector, whose support has been excessive given it?s not an infant industry. Successful reforms and incentives that enhance more generalised productivity growth would have allowed lower interest rates in the longer run.

NO Low vacancy rates and insufficient supply of new housing will fuel further rent rises and feed directly into the consumer price index. Housing ? especially rents ? makes up a significant portion of the consumer price index basket, so our collective failure to address the rental crisis will likely keep headline inflation higher for longer as well.

C

Housing affordability is now the single biggest component of the cost of living crisis for too many Australian households. Indeed, Australia's housing situation has become a crisis in its own right, with chronic shortages pushing up prices for renters and home buyers alike. And pushing more people into homelessness. This year's Budget provided some welcome respite for around one million renters who qualify for Commonwealth Rent Assistance, and better targeting of funding for crisis accommodation and homelessness services under the latest National Agreement on Social Housing and Homelessness and related arrangements. Encouraging the growth of purpose-built student accommodation was a good idea, but no specific funding was attached ? only the threat to universities of contained student numbers. These and other, smaller housing-related measures were very welcome, but we are still a long way from being able to meet the government's stated "stretch target" of adding 1.2 million "well-located" new homes. Indeed, the Government?s first annual National Housing Supply and Affordability Council report (released in April) predicts Australia?s housing shortfall will worsen until around 2027 due to rising population, diminishing household sizes and construction supply constraints. This imbalance will eventually lessen as demand growth slows and construction capacity increases. But in the meantime, housing affordability for buyers and renters is likely to deteriorate further. This depressing outlook is echoed in recent RBA forecasts and communications. We know that resolving Australia?s housing availability and affordability problems is complex. All levels of government must pull in the same direction to actively support industry and community initiatives. No single measure or organisation can solve this housing shortage alone. https://www.pexa-group.com/content-hub/news/pexa-group-welcomes-housing-measures-in-2024-25-federal-budget-but-warns-immediate-housing-shortages-set-to-deepen/

NO Increasing housing and energy subsidies are both inflationary policies that fail to address underlying supply issues, which are the root of the problem.

E

Subsidising electricity is a bad policy. It leads to higher energy consumption, which in turn necessitates increased energy capacity and results in higher prices in the long run.