Chances of surplus this decade gone

  • Oops!
    Something went wrong.
    Please try again later.
Chances of surplus this decade gone
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

The Federal Budget faces at least another five years in the red and could leave the country open to financial turmoil if the global or domestic economy turns south by the end of the decade.

Economists believe Treasurer Joe Hockey is on his way to contributing to a Federal government record of 13 consecutive Budget deficits.

The median deficit for the 2015-16 Budget from a survey of 20 economists by Bloomberg is $40 billion, with little improvement over coming years.

Mr Hockey is expected to confirm a further blowout in deficits over the forward estimates. The Government will remain in the red until at least 2018-19, partly because of falling commodity prices, slow wages growth and growing expenditures.

It had hoped to have the Budget broadly "in balance" by 2017-18, which would then give the Government the financial wiggle room to deliver income tax cuts.

But AMP Capital chief economist Shane Oliver said there were now doubts the Budget would ever get back to surplus.

He said since the Budget had gone into deficit in 2008-09 because of the global financial crisis, both sides of politics had pledged to get finances into the black.

"The continuing delay in returning to surplus from a projection of 2012-13 in the 2012-13 Budget, to 2016-17 in the 2013-14 Budget, to 2019-20 in the 2014-15 Budget, and now to around 2021-22 is cause for concern and begs the question whether we will ever get there," Mr Oliver said. "There are real reasons for concern here because demographic pressures on the Budget will start to build from early next decade and we now don't have a lot of flexibility to provide stimulus should our luck turn against us and the economy really turn down."

To deliver a surplus in 2021-22, Mr Hockey would have to become the second longest serving treasurer in Federal history.

Bank of America Merrill Lynch senior economist Saul Eslake believes the Budget will go backwards by $11 billion over the next two years simply because of a poor economic outlook. He also believes the chances of a surplus this decade are gone.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting