The 2018 National Budget — Review Our Priorities, Refocus our Energies and Reinforce our Strengths — is the first for the Deputy Prime Minister and Treasurer, the Honourable Charles Abel, and is the culmination of the process that we have seen over the past months since the election and the Alotau Accord II, the 100 Day Plan and the subsequent 25 Point Plan.
Reflecting this process of prior public announcements and consultation, with echoes from the 2015 tax review, much of this Budget brings together welcome reform elements that reflect a more modern view of the way that government plans and operates as an effective spending and taxing body.
This strategy is underpinned by two principal themes:
In not drastically seeking to curtail public spending, the Government is hoping to ensure that spending is targeted at productive sectors that will aid economic growth.
Naturally, not all stakeholders will welcome this Budget:
The issue deferred in this Budget is that of reigning in government debt. With the Government running a Budget deficit of 2.5% of GDP, the debt-to-GDP ratio of 32.2% in 2018 means that debt servicing costs (the third largest expenditure item) is rising from 10.4% to 12.7% of all expenditure. This is a challenge that cannot be put off indefinitely.