This report does not constitute a rating action. MELBOURNE (S&P Global Ratings) May 14, 2024-- Australia is pivoting from combating inflation to supporting growth and industrial policy. This change in fiscal stance could add slightly to inflation and public debt. Meanwhile, strong tax receipts--which result from elevated export prices coupled with nominal GDP growth, inbound migration, and a firm labor market--are papering over emerging spending pressures in social welfare and defense. It reveals that the central government should achieve a small headline cash surplus of 0.2% of GDP in fiscal 2024 (year ending June 30). This follows a headline surplus of 0.6% last year and represents a dramatic turnaround from the 6.6% deficit booked at the height of the pandemic.
