Morrison’s MYEFO: budget deficit $37.4 billion

That makes it highly unlikely the budget will be back in surplus by 2019/20, as predicted by Treasury in May.

The good news is that unemployment forecasts have rebounded, with the jobless rate now expected to peak at six per cent next year instead of the previous 6.5 per cent forecast.

Morrison says the upbeat employment estimates may even be “too conservative” given the whopping 340,000 jobs added to the economy in the past 12 months.

The Australian economy was heading in the right direction, demonstrating resilience in the face of strong global headwinds.

Morrison insists Treasury’s “more realistic outlook” for economic growth should be seen “as a statement of confidence”.

The government remained “patiently and responsibly on the path to budget balance” despite revenue write-downs of almost $34 billion, courtesy of plummeting commodity prices, a declining terms of trade and weaker global growth.

“We have adopted a measured approach, avoiding extreme responses that would place a hand brake on household consumption and business investment growth and unnecessarily threaten the fresh new momentum emerging in our transitioning economy,” the treasurer said.

Inflation is forecast to remain between the Reserve Bank’s two-to-three per cent target range.

AAP.