IMF says Australian Government budget assumptions too high

Daniel James, the IMF’s mission chief to Australia, said economic growth was likely to be around 2.5% over the longer term which is below forecasts of about 3.5% outlined in the May budget. The visiting IMF team urged the government to boost infrastructure spending, toughen controls on banks making increasingly risky loans to property investors and to control recurring federal government expenditure. They also called on the Government to lower income and company taxes, eliminate stamp duties, broaden the base of the GST and possibly raise the rate. Mr Daniel said the current 2.0% cash rate was “broadly appropriate but we’re seeing an implicit easing bias because we see the balance of risks tilted to the downside”.