Scott Morrison has tried to temper expectations of a significant housing reform package in the May budget, saying tougher foreign investment rules are already taking heat out of the market.
But he has flagged changes to the way in which the budget will report government debt, saying he wants the budget to distinguish between debt incurred to fund infrastructure and debt incurred to fund government programs.
Economists have been pushing for such a change for years.
Morrison will deliver his pre-budget speech to the Australian Business Economists on Thursday.
He will use his speech to describe the economic context in which the Turnbull government’s budget will be delivered on 9 May, saying global growth has improved in the past 12 months and Australia’s economy is still performing better than most.
He will say he is keen to push ahead with the government’s economic plans from his previous budget – including tax cuts for big businesses – while pursuing further savings measures, while keeping the triple-A credit rating in mind.
But he will try to temper expectations of a large housing reform package, saying while the government is aware that risky developments in the housing market could “spill over” into the broader economy, the government does not want to do anything that risks “causing a broader housing shock”.
“We are already seeing signs the heat in our housing markets may be coming off, especially in the apartment market,” Morrison says in notes seen by Guardian Australia. “Cooling foreign investor interest, due to tougher foreign investment rules implemented by our government and capital outflow restrictions in China, are already having an impact.
“The number of foreign investment applications for residential housing has fallen from 40,000 last year to an expected 15,000 this year.”
Morrison will say the government’s priority for budget “repair” remains controlling growth in expenditure. But he wants to make a changes in this budget to the way government debt is reported.
“In this budget we will be making changes to the way we report government debt and link it to government spending by increasing the visibility on good and bad debt,” he will say.
“These changes will make clearer the share of expenditure that is contributing to investment that increases productive capacity and produces future income, and the debt that is being incurred to deal with everyday expenditure.
“This will be done by reporting the net operating balance alongside the underlying cash balance.
“The underlying cash balance does not differentiate between recurrent expenditure and investment in productive capital, including infrastructure. The net operating balance helps to make this distinction.”
He said the budget will also be showing the level of government debt across portfolios.
“We all need to understand what is driving the growth in our public debt and we need to budget in a way that creates accountability for increasing public debt and the interest payments that go with it,” he will say. “Portfolios will be held responsible for the debts they are incurring for future generations as a result of their expenditure.”
It is anticipated that key initiatives may be unveiled in other portfolios ahead of the budget.
The education minister, Simon Birmingham, has requested to speak to the National Press Club next week.
