The Australian federal government budget will be announced today

  • 2017-18 Federal Budget
  • At 7.30pm Sydney time ( 0930GMT Tuesday 9th May)
  • The 'headline' is the expected budget deficit, median is at $A28bn
  • The 'path' to return to surplus should be for 2020/21
  • This should be enough to placate the ratings agencies, holding on to the AAA rating from the 3 majors
  • Going forward, watch the estimates used for commodity prices (for the budget these impact on expected tax revenues, if the estimates of prices are way out of line with what appears reasonable then the credibility of budget calculations are questioned)
  • The government will also provide estimates for GDP growth (again, this influences revenue collection)

There is much more detail, of course, and I'll post up more a little later, but the above is what traders will be immediately be focused on.

On bigger-picture policy,

  • Watch for measures on housing affordability package and splitting government debt into "good" & "bad" debt; "good" for investment into infrastructure & productivity-enhancing initiatives, and "bad" for day-to-day spending. Overly simplistic, yes, but hey, it's a political process!
  • There will be a slew of infrastructure-related announcements - airports, railways, palaces (I made that last one up)
  • Watch also for an announcement on the business tax rate(s) ... there is expected to be some sort of tax cut for business.

I'll have more to come on separate posts with more detail for those that are interested.