The Mid-Year Economic and Fiscal Outlook 2024/25

On 14 May 2024, the Treasurer of Australia, the Hon Dr Jim Chalmers MP, announced the Government’s third Federal Budget since coming into office in 2022. Following a surplus of $22.1 billion in 2022-23, the Budget recorded a second surplus of $9.3 billion in 2023-24, making it the first back-to-back surplus in almost two decades. In addition, the Budget forecasted a $28.3 billion deficit in 2024-25 and outlined five key aims. Among these were to ease cost-of-living pressures, build more homes for Australians, and invest in a Future Made in Australia.

In this week’s Insights Article, the Nexus APAC team investigates the role of the Mid-Year Economic and Fiscal Outlook (MYEFO) in the Government’s economic program.

The MYEFO provides the Government with an opportunity to revisit its key budgetary aims. It includes updates to the economic and fiscal outlook, changes to Budget aggregates, and a summary of all policy decisions taken since the Budget.

The aim of the MYEFO is to improve fiscal policy outcomes by facilitating public scrutiny of fiscal performance and policy. Under section 14 of the Charter of Budget Honesty Act 1998 (‘the Act’), the Government must release the MYEFO each year by the end of January, or 6 months after the last Budget, whichever is later.

Therefore, the MYEFO is not only a chance for the Government to adjust its Budget policies, but also an important mechanism for ensuring accountability and transparency in the management of fiscal policy in Australia.

MYEFO – Who’s Responsible

The MYEFO is overseen by the Federal Economic Team. This includes the Treasurer of Australia, the Hon Dr Jim Chalmers MP, the Minister for Finance, and Senator Katy Gallagher (who is also Minister for Women and Minister for the Public Service). The Department of Prime Minister and Cabinet has a central role in coordinating MYEFO initiatives.

Portfolio Ministers can propose new or amended proposals to be included in the MYEFO. However, the expectation is that these should only be raised if they are urgent and cannot be considered by the Government in the next Budget.

MYEFO 24/25 – What to Expect

This year’s MYEFO is significant because it will be one of the Government’s last economic updates before the Federal Election. Therefore, the Government will likely reinforce its commitment to cost-of-living relief and building more homes as these issues will be at the forefront of the political debate. Despite recent criticism of the Future Made in Australia scheme, it is also likely the Government will reaffirm support for the plan as it is at the centre of its industrial policy.

While inflationary pressures remain high, they have moderated substantially, so the Government may look to stimulate household consumption to support economic growth. The Government will also likely seek to protect the Australian economy from international events. These include heightened tensions in the Middle East and the war in Ukraine, which add to energy costs, disrupt international trade and slow global economic growth. They also include concerns about the Chinese economy, which is experiencing slower consumer demand and a weakened property sector.

With the previous MYEFO announcement being delivered in the early stages of December, we expect this year’s MYEFO to be delivered after the final sitting week of this year.