26 September 2023

Auditor-General finds Budget budging!

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A report by the Auditor-General on the Government’s 2022-23 State Budget tabled in June has found that in the few months since it was released, some of its Budget forecasts may be impacted.

In his Report 10 of 2022 State finances and related matters the Auditor-General Andrew Richardson said that since the 2022-23 Budget was released there have been “significant emerging and evolving events, which may impact budget forecasts.”

“This includes large waves of COVID-19 infections in South Australia during the winter period and high inflation leading the Reserve Bank of Australia to raise its cash rate target by 2.25%,” Mr Richardson said.

“Significant economic uncertainty increases risk that actual results will substantially differ from Budget forecasts,” he said.

“The 2022-23 Budget assumes moderate economic growth over the four years of the Budget, however it notes that this will be against a backdrop of several economic risk factors.”

The Auditor-General said the economic risks that may impact forecasts in the 2022‐23 Budget include rising inflation and interest rates placing pressure on the fiscal and interest rates; pressure on the fiscal sustainability of governments; emergence of new, more virulent or vaccine‐resistant variants of COVID‐19: and continued global supply chain disruptions.

“The Department of Treasury and Finance (DTF) advised us that, at the time of the 2022‐23 Budget, it considered the impacts of these risks to be potentially significant and highly uncertain.

“It also considered the economic forecasts in the Budget to be, on balance, likely to prevail in the face of the assessed risks in.”

The Auditor-General’s report can be accessed at this PS News link.

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