Analysts warn that news of a budget surplus could cover the truth of a slowing economy. 

“Rather than be a budget that will fuel inflation, the budget is actually closer to austerity than stimulation,” according to Greg Jericho from The Australia Institute. 

This week’s Budget has been met with scepticism from many commentators and economists who believe it could fuel inflation. 

However, policy director Greg Jericho argues in a recent Guardian Australia column that the budget should, in fact, be more expansionary given the projected slowing economy.

Critics of the budget point to the projected surplus in 2022-23 before returning to a deficit in future years as evidence of its potential to fuel inflation. 

But according to Jericho, the shift from surplus to deficit is primarily due to changes in oil, gas, coal, and iron ore prices. 

In reality, the spending measures proposed by the government are hardly expansionary, with the majority aimed at reducing medical and energy bills rather than directly giving households more money.

Despite concerns about inflation, Jericho says the Budget appropriately addresses the issue by lowering energy and medical costs, proving that governments can play a role in reducing inflation without solely relying on slowing down the economy. 

With a slowing economy projected over the next two years, he says there is a strong case for the government to increase spending to lift economic growth.

Jericho suggests that by this time next year, the conversation is likely to shift from why the budget is not in surplus to what the government is doing to stimulate the economy. 

With the current budget focused on reducing costs rather than expanding the economy, it remains to be seen whether the government will take further action to boost growth.