Big Four respond to unambitious Australian federal budget

15 May 2024 3 min. read
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The Australian branches of the ‘Big Four’ accounting and consulting firms have responded to the latest federal budget, lamenting a lack of long-term structural reform in their appraisals.

Widely received as a relatively soft election year budget with a headline surplus, the 2024/25 edition has been questioned by the Big Four for lacking the necessary structural reforms to combat ongoing economic challenges and boost productivity.

However, the firms themselves have received another hit, with the Labor government to continue in its mission to slash federal consultancy spending, announcing a further $1 billion in outsourcing cuts on top of its $3 billion reduction pledge prior to taking office.

Consulting industry Big Four sees Great Resignation drag to close

A sample of edited grabs from the Big Four’s chief economists:

Ernst & YoungCherelle Murphy:

“We said the budget needed to do three things: not add to spending unless offsetting it elsewhere; change existing policy to lower spending and find new revenue that will persist over time; and put in place policies to assist the private sector to maximise productivity growth. Unfortunately, we were left disappointed on all three fronts. With billions being spilled into the economy, the budget has thwarted the task of tightening the structural deficit.”

“Although no significant policy reforms were expected, it does not take away from our disappointment in the lack of reform measures in this Budget, especially given Australia’s flailing productivity growth. With an election less than a year away, the Government failed to use its budget narrative as a starting point to convince voters why a more ambitious reform agenda is needed in its second term.”

KPMG – Brendan Rynne:

“The Budget is a very political statement in that it contains a range of overt measures and targets aligned with the political philosophy of the Albanese Government. The key theme permeating through the Budget is that increased government involvement in the economy will result in better outcomes for society – funded through both the redistribution of income from the wealthy and the application of public sector debt.”

“Today’s surplus is going to be the last for quite a while – there is nothing in the budget about either revenue or expenditure reforms. Assuming the government has not decided that long term structural budget deficits are no longer a problem (which goes against economic fundamentals), then the can is being kicked into its next term or beyond, with a hope that productivity might re-emerge and help solve part of the problem.”

Deloitte Access EconomicsStephen Smith (partner):

“The Budget handed down by Treasurer Jim Chalmers is a budget for the here and now. Led by substantial cost-of-living measures and a return to industry policy, and braced by immaculate inflation forecasts, the Budget has all the hallmarks of a pre-election economic narrative. Yet, despite the rhetoric, the Government’s increased spending has the potential to push up inflation and make the Reserve Bank’s job more difficult.”

“The Budget makes good strides in education and skills reform, funds long-overdue New Vehicle Efficiency standards and makes meaningful investments in mental health and suicide prevention. But there was precious little in the way of major tax reform, and plenty of talk but not enough action on housing supply. Overall, this Budget bakes in a lot of new spending, but not all of it represents good value of money.”

And PwC?

Much of PwC’s economics team previously departed for Scyne Advisory – including former chief economist Amy Auster – and the firm is also now winding up its private sector economic consulting offering.