SYDNEY -- The Australian government unveiled a budget on April 2 that included tax cuts and one-off cash payments to help low- and middle-income earners with their electricity bills, in the run-up to the general election expected late May.
Prime Minister Scott Morrison's government will earmark 280 million Australian dollars ($198 million) for assistance with electricity bills to about 4 million welfare recipients, including pensioners and single parents, in the fiscal year through June 2020.
Tax cuts for Australians with annual incomes up to AU$90,000 were announced as well. Such tax relief measures are aimed at lifting household incomes, easing cost pressures and boosting consumer spending.
The center-right coalition government comprising the Liberal Party and the National Party has been plagued by slumping approval ratings and is expected to face an uphill battle in the upcoming general election. An analyst at British research company Capital Economics said any plans could be turned over if the coalition loses in the general election.
The government expects the first budget surplus in 12 years in the next fiscal year, on the back of a solid economy. There is a $4.2 billion deficit this year, but the government expects a $7.1 billion surplus in fiscal year 2019-2020.
Tax revenues are expected to increase, lifted by rising prices of iron ore and other resources as well as improved employment.
The government expects Australia's real gross domestic product to grow 2.75% in the next fiscal year. The country's seasonally adjusted unemployment rate was 4.9% in February, hitting the lowest in seven years, thanks to the government's infrastructure investment and an increase in corporate investment in nonresource sectors.
Treasurer Josh Frydenberg told reporters on April 2: "Australia is stronger than when we came to government six years ago. Growth is higher. Unemployment is lower. There are fewer people on welfare. There [is] a record number of Australians with [jobs]."
But analysts said the government's estimates are overly optimistic. Cherelle Murphy, senior economist at Australia and New Zealand Banking Group, expects Australia's economy to grow just 2.4% in fiscal 2019-2020.
The biggest concern will be falling housing prices. Property prices continued to rise through mid-2017 due to low interest rates and investments from China. But Beijing has since clamped down on capital outflows, which has led to a decline in investments in Australia. Personal consumption, which accounts for about 60% of the country's GDP, is also beginning to slow down as Australians brace for a decline in asset value.