The government is being urged to invest more in social and affordable housing after Treasury revealed a “return to balance” following greater-than-expected receipts and lower total payments in FY19.
On Thursday (19 September), the Treasury released the final budget outcome for the 12 months to 30 June.
According to the budget outcome, the underlying cash deficit was $690 million for the 2018-19 financial year.
This represents $13.8 billion more than was estimated at the time of the 2018-19 budget in May 2018 and $4.2 billion more than forecast in April of this year.
The $0.7 billion underlying cash deficit represents 0.0 per cent of gross domestic product (GDP).
This is said to be the first time the budget has been “to balance” since the global financial crisis, in 2007-08.
The Treasury outlined that this was largely the result of higher total receipts of $11.5 billion and lower total payments of $6.6 billion.
The result was primarily attributed to higher-than-assumed prices for key commodities, stronger export trade and greater-than-expected job growth, alongside a $4.6-billion underspend on the National Disability Insurance Scheme.
Speaking of the budget outcome in a joint statement, Treasurer Josh Frydenberg and Finance Minister Mathias Cormann welcomed the budget having “returned to balance for the first time in 11 years”, which they attributed to “the Morrison government’s economic plan and responsible budget management”.
“Our strong fiscal management has put the budget on a sustainable trajectory, ensuring that we can guarantee the essential services that Australians rely on,” the politicians said.
“The 2018-19 final budget outcome shows that we have kept spending as a share of GDP in 2018-19 at 24.6 per cent of GDP, below the long-run average of 24.7 per cent for the second consecutive year, while also providing record levels of investment in essential services like hospitals, schools and aged care.”
Call for housing investment
Following the release of the final budget outcome, national housing campaign Everybody’s Home called on Mr Frydenberg to use the improved budget position to provide investment in “desperately needed social housing infrastructure for Australians who are homeless or struggling in chronic rental stress”.
Everybody’s Home campaign spokesperson Kate Colvin commented that providing safe and affordable homes for people would help stimulate the economy.
“Social and affordable housing requires the same builders, plumbers and contractors as any other housing to construct, which creates both jobs and economic activity,” Ms Colvin elaborated.
“AHURI has forecast Australia will need 730,000 more social housing properties by 2036 to fill the massive gap we have now after years of under-investment, and to keep pace with population growth.
“Using the budget surplus to kickstart work on meeting this need, and at the same time reinvigorating the economy, makes absolute sense.”
Ms Colvin went on to highlight that social housing levels had dropped from between 6 per cent and 7 per cent to 4.2 per cent nationally.
“At the same time, homelessness has grown to almost record highs, with 116,000 Australians homeless in Australia on any night,” she continued.
“Post-war Australia was building 14,000 social housing properties a year. That figure is now closer to 3,000, so there is no surprise homelessness is reaching crisis levels.”
She concluded: “The improved budget position is a real opportunity for the government to lead a national effort to address homelessness and support the 811,000 Australian households in rent stress before we reach the point of no return.”
[Related: Budget 2019-20 released]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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