DEFENCE SPEND UNDER WATCH; GAS HOPES UP

Marles lays down law on Defence budget discipline

Deputy Prime Minister Richard Marles says that Australia’s Defence funding will rise to around 2.4 per cent of Gross Domestic Product by 2033-34, with a spending increase “of historic proportions”, up from an original projection of 2.1 per cent of GDP. Mr Marles told a Sydney forum that not only “tens of billions of real additional dollars” were being directed to Defence, but the quality of expenditure would improve. He cited the issue of over-programming, with up to $42 billion of additional Defence spending without any additional allocation in the Federal Budget. Mr Marles said that while over-programming of a level up to 20 per cent ensured ongoing procurement in case of delays, in some years of forward estimates Defence over-programming had reached 30-40 per cent.

Confidence in ongoing US support for AUKUS

Meanwhile, Richard Marles says he is confident that a potential Trump Administration in the United States would support the AUKUS defence partnership. In his Sydney address, the Deputy PM said he had “real confidence” that AUKUS would survive because it was in the strategic interests of the US, as well as that of Australia and the UK. The Defence Minister said legislation passed by the US Congress last year to facilitate the sale of Virginia-class submarines and to reduce barriers to defence co-operation was supported across the political spectrum – including by Republicans who supported Donald Trump.

Employment levels, wage growth boosting Federal tax take

Steady growth in employment and wages drove a healthy $8.8 billion increase in the Federal Government’s tax take through 2023, according to latest figures. The Australian Bureau of Statistics said the 5.7 per cent annual increase was largely attributed to personal income tax (which rose 11.2 per cent in the year), while company income tax revenue eased slightly. Goods and services tax (GST) rose 3.7 per cent, or $0.8 billion, during 2023. State and Local taxes increased by almost 10 per cent, or $3.4 billion, through the year. From December 2018 through December 2023, payroll taxes rose 48.4 per cent while stamp duties on conveyances rose by almost 55 per cent.

East coast gas winter forecasts looking up

Industry on Australia’s east coast has been given hope that it will benefit from a small surplus in gas supply over the winter months. The Australian Competition and Consumer Commission (ACCC) says the east coast gas market is expected to have a six petajoule (PJ) surplus in the third quarter of 2024, even if the three LNG producers export all their uncontracted gas. ACCC Chair Gina Cass-Gottlieb said that while the surplus for peak demand winter months was positive, the outlook was still uncertain in both supply and demand. On a regional basis, Victoria, New South Wales, South Australia and Tasmania were expected to need at least an additional 25 PJ of gas to meet demand in the third quarter. But Queensland was forecast to have a 30 PJ surplus, even if the LNG producers exported all their uncontracted gas.

PM holds cards on full energy bill relief

Prime Minister Anthony Albanese has sidestepped whether the forthcoming Federal Budget would deliver a promised $275 savings in electricity bills by 2025. In a radio interview, Mr Albanese said the world had experienced the biggest energy price shock in 50 years, citing the effect of the conflict in Ukraine. The PM said there were positive signs emerging, with the national regulator reporting a lower default market offer, but there was more work to do. Energy bill relief announced last year had assisted five million Australians and assisted small businesses, he said. Mr Albanese said the Government was examining Budget measures that offered relief and put downward pressure on inflation.

Sharp fall in trade surplus as exports dip

Australia’s post-Covid run of buoyant trade surpluses may be coming to an end, if latest ABS national trade figures are an indication. In February, the balance of trade, seasonally adjusted, on goods fell sharply by $2.7 billion, or 27 per cent on the previous month. Exports fell by more than $1 billion, driven by lower exports of ores, minerals and rural goods. Imports rose by $1.7 billion, or by 4.8 per cent, driven by processed industrial supplies. In June 2022, Australia recorded a seasonally-adjusted surplus on traded goods of almost $20 billion, as export levels boomed.