Bulletin: Inflation, Jobs, Spending Restraint Narrow Australia's Deficit

This report does not constitute a rating action. MELBOURNE (S&P Global Ratings) May 9, 2023--Low unemployment, strong commodity prices and immigration, high inflation, and spending restraint improve Australia's deficit. These improvements are positive, and slightly better than the forecast underpinning our rating on Australia (AAA/Stable/A-1+) for fiscal 2023. The government is not in surplus by our measures. Many stakeholders focus on the underlying cash balance. However, we believe the more comprehensive headline cash balance provides a better picture of the government's finances as it includes "off-budget" spending such as loans, investments, and foreign aid. Higher prices, strong migration, and low unemployment are driving nominal GDP and corporate and personal income taxes higher. We consider this trend may continue because we

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