Australia to improve budget bottom line thanks to rapid vaccine uptake, Deloitte predicts

The Australian government is on track to deliver deficits totalling nearly $240bn over four years, an estimated improvement of $100bn since the last budget, a respected economic forecaster says.

With the government due to publish a budget update on Thursday, Deloitte Access Economics has released its own predictions for an improved bottom line, arguing the economy has been recovering much faster than Treasury assumed seven months ago.

The budget delivered in May this year estimated an underlying cash deficit of $106.6bn in 2021-22, followed by years of red ink including a shortfall of $57bn in 2024-25. Those four years of deficits added up to $342bn.

The upbeat assessment also reflects a difference between Deloitte and Treasury on a key economic indicator.

While Treasury predicted national income growing at an annual average rate of just 2.8% across the six years between Covid arriving in 2019-20 and the end of 2024-25, Deloitte puts this measure at 4.2%.

The government has attempted to put economic recovery at the centre of its re-election pitch.