Australia is tipped to get a massive revenue boost over the next 12-months thanks to the war in the Middle East, but the government is being urged to save the windfall.<\/p>\n
Fresh modelling by the Department of Industry, Science and Resources expects export revenue to rise to $416bn in the 2026-2027 financial year, smashing previous estimates in December by $42bn.<\/p>\n
The forecast is based on the assumption shipping through the critical Strait of Hormuz will not normalise until July and the impacts of the Middle East war will be felt well into the 2026-2027 financial year.<\/p>\n
Investments in artificial intelligence, \u201csolid\u201d growth out of China, India and Vietnam, efforts to secure energy independence and the growth and the further investment in renewable power will all also help lift commodity prices.<\/p>\n
Despite the massive uplift in revenue, AMP chief economist Shane Oliver warns against splashing the cash as it would ultimately just cost every Australian through higher cost-of-living. <\/p>\n
\u201cIf the economy was collapsing into a recession then there could be an argument to spend some of it, but that is currently not the case,\u201d Mr Oliver said.<\/p>\n
\u201cThe problem in Australia has been the temptation to spend too much money and we\u2019ve already seen government spending as a share of the economy rise well above where it was pre-pandemic.<\/p>\n
\u201cThat government spending is creating problems in the economy by using up spare capacity and adding to inflation.\u201d<\/p>\n
In the fight against inflation the Reserve Bank has lifted interest rates three times in 2026 by a total of 75 basis points taking the official cash rate from 3.60 to 4.35 per cent. <\/p>\n
Regardless of what the government does with the additional tax take, AMP predicts another 25 basis point hike in August, lifting the cash rate to 4.60 per cent. <\/p>\n
Mr Oliver said if the Australian government was to give part of the windfall back it would just lead to spending in other parts of economy, which would increase inflation.<\/p>\n
\u201cAustralians would get a benefit in the form of lower petrol prices, but the truth is those with a mortgage end up having to pay higher rates,\u201d he said.<\/p>\n
Instead Mr Oliver urges the government to save any bonus windfalls and to use the money to pay down the national debt.<\/p>\n
The Australian Office of Financial Management says Australia owes $974.9bn.<\/p>\n
\u201cIn the interest of taking pressure off inflation and to minimise any further increase in levels of public debt, the government should save any windfalls it gets,\u201d he said. <\/p>\n
\u201cThe other reason it makes sense to save it is because the more we save the less our debt goes up.\u201d<\/p>\n
\u201cOf course if we save enough we go back to surplus which would be a good thing because we can start reducing our debt.\u201d<\/p>\n
\u201cWhile the debt level isn\u2019t excessive by US or European standards, it is way up from where it was prior to the pandemic, which means we have less money put aside for a rainy day.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Australia is tipped to get a massive revenue boost over the next 12-months thanks to the war in…\n","protected":false},"author":2,"featured_media":43786,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[22,21,10498],"class_list":["post-43785","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-au","tag-austrlia","tag-newswire-business"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/posts\/43785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/comments?post=43785"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/posts\/43785\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/media\/43786"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/media?parent=43785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/categories?post=43785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/tags?post=43785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}