Australia will run its economy even hotter, joining the U.S. and Europe in holding open the fiscal spigot in tandem with monetary policy as they try to drive down unemployment and revive inflation.
Treasurer Josh Frydenberg’s 2021-22 big budget spend aligns both economic orthodoxy and the political needs of a government with an election due in a year. The deficit will be A$106.6 billion in the 12 months through June 2022, exceeding economists’ A$80 billion estimate. That reflects higher outlays for infrastructure, aged care and tax breaks.
“The government will secure the economic recovery by taking further action to support private sector-led growth and drive down the unemployment rate,” the 2021-22 budget papers said Tuesday. “Economic growth is essential to maintaining a strong and sustainable fiscal position.”
Frydenberg is setting aside budget repair to join forces with the Reserve Bank in trying to revive…