We’ve started October with gusto!

The ASX200 rallied a solid 5.4% last week beating the abysmal performance for the whole quarter to September 30th of -0.4%.

The market LOVED the Federal Government’s Budget $85b which was chock full of stimulus (over 4 years). I thought it was clever with short, medium, and longer term measures in place.

Some highlights;                

Investment incentives were expanded to larger companies with immediate asset write-offs available to firms with turnover of less than $5bn (covering around 99% of businesses) – worth$26.7bn. It is very much aimed at encouraging business investment.

‍Employers are to receive incentives to employ under 35 year olds who were previously unemployed($4bn).

‍Tax payers are benefiting by $17.8bn (over 4 years) with the backdate of the Phase 2 tax cuts.

‍Infrastructure spend is also being brought forward for shovel ready projects y $6.7bn. A full outline can be viewed here.

In all, the stimulus is expected to boost GDP by around 7%.

But it of course comes at a cost, with our net government debt rising from about 36% of GDP to around 44% by 2024. Thankfully our prudence and Budget surpluses in good years have put us in an enviable position. Compare our forecast 44% with Japan which is now close to 250%!

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