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Australia budget reversal may accelerate downgrade

Friday, May 26, 2017

Significance

The Australian federal budget, delivered on May 9, attempts to revive the electoral prospects of the Liberal-National Coalition government. The timeline for a return to surplus is no closer than in the last budget, but Prime Minister Malcolm Turnbull has shifted away from policies favoured by conservatives in the government, increasing both taxes and infrastructure spending.

Impacts

  • The infrastructure projects backed by the budget are more likely to deliver local voting support than cost-efficient benefits.
  • Weak party organisation and funding controversies may undercut the competitiveness of the populist right-wing One Nation party.
  • Negative flow-on effects of the end of the mining boom and the shift to part-time work are likely to undercut the tax take in Canberra.
  • Stricter visa requirements championed by the government could hit education-related travel to the country, Australia's top services export.
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