{"id":815627,"date":"2024-12-29T04:16:42","date_gmt":"2024-12-29T10:16:42","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2024\/12\/29\/workers-bear-more-budget-burden-as-company-revenues-slip\/"},"modified":"2024-12-29T04:16:42","modified_gmt":"2024-12-29T10:16:42","slug":"workers-bear-more-budget-burden-as-company-revenues-slip","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2024\/12\/29\/workers-bear-more-budget-burden-as-company-revenues-slip\/","title":{"rendered":"Workers bear more budget burden as company revenues slip"},"content":{"rendered":"
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Australia\u2019s army of workers will carry more of the federal budget, with company tax collections tipped to suffer their first fall since the COVID pandemic as China\u2019s economic slowdown and the ramifications of the Trump presidency hit the government\u2019s bottom line.<\/p>\n

Treasurer Jim Chalmers, in Wednesday\u2019s mid-year fiscal update, will reveal company tax collections \u2013 which have already softened this year \u2013 will be down $8.5 billion on his May budget forecasts as demand from China and prices for key commodities such as iron ore, coal and LNG soften.<\/p>\n

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Softening prices for key commodities including oil and gas, due to the slowdown in China, will hit the federal budget.<\/span>Credit: <\/span> <\/cite><\/p>\n<\/figcaption><\/figure>\n

On top of extra spending in areas including veterans, Medicare and childcare, the budget deficit \u2013 which Chalmers forecast in May to hit $28.3 billion \u2013 is expected to widen. Some economists tip it could exceed $42 billion.<\/p>\n

Only the surprising strength of the jobs market is preventing the budget from sinking further into the red. Unemployment unexpectedly fell to 3.9 per cent in November to be lower now than it was at the start of the year.<\/p>\n<\/div>\n

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That strength is evident in personal income tax collections which, to the end of October, were $5 billion ahead of what Chalmers forecast in the May budget.<\/p>\n

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But the same figures also confirmed company tax revenue sliding to lag forecasts by $1.7 billion. Company tax is the federal government\u2019s second-largest revenue source.<\/p>\n

Chalmers said the slowdown in China, where officials last week vowed to cut interest rates and lift government borrowing to support the economy, was of particular concern as it absorbed about a third of Australia\u2019s exports.<\/p>\n

\u201cChallenges in the Chinese economy will have flow-on effects for our own budget, and that will be clear in Treasury\u2019s forecasts,\u201d he said.<\/p>\n<\/div>\n<\/div>\n

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\u201cThe global economy is uncertain, the global outlook is unsettling, and that\u2019s weighing heavily on our economy.\u201d<\/p>\n

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\u201cChallenges in the Chinese economy will have flow-on effects for our own budget\u201d: Treasurer Jim Chalmers.<\/span>Credit: <\/span>Alex Ellinghausen<\/cite><\/p>\n<\/figcaption><\/figure>\n

The last time company tax collections slipped from their budget forecast was in 2019-20 \u2013 then treasurer Josh Frydenberg had to deal with an $8.9 billion single-year collapse due to the impact of the pandemic. Chalmers\u2019 downgrade will be milder and spread out over four years.<\/p>\n

Economic growth also slumped, with the country enduring its biggest three-month contraction since the early stages of the Great Depression.<\/p>\n

Growth has slowed sharply over the past 12 months but remains positive. Annual growth in 2023-24 was 1.2 per cent, compared with 2.4 per cent in 2022-23. Without population growth and government spending, the economy would have slipped into recession.<\/p>\n<\/div>\n

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The mid-year update will also have to start accounting for the policy agenda of President-elect Donald Trump, who has threatened to impose tariffs of up to 20 per cent on imports to America. Already, he has threatened China, Mexico and Canada \u2013 America\u2019s three largest trading partners \u2013 with extra tariffs.<\/p>\n

At the weekend, the government revealed the budget would take a $1.8 billion hit over the next four years due to a faster-than-expected lift in payments flowing to the nation\u2019s veterans. The May budget contained an extra $6.5 billion in veterans\u2019 support as the government cleared a backlog of more than 60,000 cases left by the Morrison government.<\/p>\n

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The clean-up and repair from Tropical Cyclone Jasper that hit Far North Queensland in December 2023 continues to affect the budget.<\/span>Credit: <\/span>Twitter<\/cite><\/p>\n<\/figcaption><\/figure>\n

Spending on natural disasters, including Tropical Cyclone Jasper, which hit Far North Queensland late last year, will also cost the budget about $2 billion.<\/p>\n

On Monday, Housing Minister Clare O\u2019Neil will announce the second round of funding from its Housing Australia Future Fund, which will fast-track the construction of 5000 new social homes nationwide.<\/p>\n<\/div>\n

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States and territories will have until the end of January to submit projects, which must add to the existing stock of social housing. Funding will be available on a \u201cuse it or lose it\u201d basis and follows funding for 13,700 homes announced in September.<\/p>\n