skip to log on skip to main content
VoiceOver users please use the tab key when navigating expanded menus
Article related to:


BUDGET 23-24: fiscal policy is (still) back

Chief Economist, ANZ

2023-05-08 04:30

Fiscal policy is back – or rather, still back.

The pandemic unleashed fiscal policy as a much more active arm of economic policy. That unbridling occurred globally; equally global is governments continuing with front-footed fiscal policy approaches.

That is the first takeaway of this budget. The budget remains very important at a macroeconomic level; as much as it has always been important at an individual level.

Beyond 2020’s pandemic-related exceptionalism, budget payments as a share of gross domestic product (GDP) are expected to be higher over every year of the forward estimates than at any time since the mid-1980s. By 2033/34 receipts as a share of GDP are projected to be the highest since at least 1978.


The inflation challenge can be seen clearly in the budget. The $A14.6 billon in household support is the largest package of spending.

In Australia’s $A2 trillion economy, this won’t make the inflation challenge materially worse. But equally the budget is $A126 billion better off since October from stronger revenue, with lower interest payments on government debt also helping, and only a modest portion of that is being spent. The Reserve Bank of Australia, in ANZ Research’s view, still has a task in front of it to get inflation back within its target band.

Many will talk about ageing, caring and defence as among the main medium-term fiscal pressures. In a narrow sense they are right. The over-80s population rose quite reliably by around 25,000 people a year over the past two decades. Within four years that increase will be around 65,000 people a year.

This budget continues the previous practice of separately identifying climate-related expenditure. The October budget set the benchmark with $A24.9 billion in expenditure, with this budget only adding $A4.6 billion. While the government has also signalled its intention to issue green bonds over the next year, the countdown clock to 2030 is ticking.

Missing from the list of medium-term challenges is China. Adjusting to a slower-growing China and challenging global investment landscape will require flexibility. It will require an economy that is productive and can pivot.

In a service-driven economy, the productivity challenges are particularly complex. This budget does have some focus on the tech and digital transformation agendas. Beyond that though, the first, in many ways unwritten, rule of improved economic performance is use what you have most effectively.

The childcare subsidy program and increased financial support for single parents are additional steps in this direction, and this budget also continues the recent trend of ‘women’s budget’ statements. In fact, in March female participation, employment, share of hours worked and share of full-time jobs all hit records.

Inflation, aging, defence, caring, climate change, China and productivity. Keep the second Tuesday in May highlighted in your diary - it’s not getting dull anytime soon. 

BUDGET 23-24: fiscal policy is (still) back
Richard Yetsenga
Chief Economist, ANZ


Sign up
Icon of ANZ logo coming out of an envelope

Receive insights direct to your inbox


Related articles

This publication is published by Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (“ANZBGL”) in Australia. This publication is intended as thought-leadership material. It is not published with the intention of providing any direct or indirect recommendations relating to any financial product, asset class or trading strategy. The information in this publication is not intended to influence any person to make a decision in relation to a financial product or class of financial products. It is general in nature and does not take account of the circumstances of any individual or class of individuals. Nothing in this publication constitutes a recommendation, solicitation or offer by ANZBGL or its branches or subsidiaries (collectively “ANZ”) to you to acquire a product or service, or an offer by ANZ to provide you with other products or services. All information contained in this publication is based on information available at the time of publication. While this publication has been prepared in good faith, no representation, warranty, assurance or undertaking is or will be made, and no responsibility or liability is or will be accepted by ANZ in relation to the accuracy or completeness of this publication or the use of information contained in this publication. ANZ does not provide any financial, investment, legal or taxation advice in connection with this publication.