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Federal Budget 16-17

There is always plenty of talk ahead of a budget, but next week's is particularly interesting given its proximity to a looming election. So what should we expect?

Election budget will highlight the need to reform

Author: Shane Oliver
Chief Economist and Head of Investment Strategy
AMP Capital.

There will be added interest in the Federal Budget 2016-17 announcement on May 3 as it’s likely to be the final major economic statement the Government makes before the election later this year.
With the opposition taking a strong stance on capital gains tax and negative gearing, we’re looking at a focus this year on taxation.

Corporate tax could be cut by up to 1.5% however, there is likely to be minimal – if any – relief in terms of personal income tax. There may also be some changes to superannuation.

Overall, the outlook is for minimal growth in government spending, with spending offset by savings elsewhere in the Budget.

Where sharemarkets are concerned, historically we have seen some sideways tracking in election years but there has been no evidence to date of a lasting impact caused by an election. In fact, Australian economic growth has actually been strong during election years since 1980.

Budget 2016-17 will be released at approximately 7.30pm (AEST) on Tuesday 3 May 2016

In this video, we provide investors with an overview of what to expect in this year’s ‘pre-election’ budget.

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