The slowdown comes as Australia just notched its 28th year of consecutive economic growth, with unemployment sitting at its lowest level since 2011.
“The worst economic news is in things that the Federal Budget taxes lightly,” Richardson said.
According to Deloitte, total profit taxes are forecast to outperform the matching official forecasts by a handy $2.3 billion this financial year, and by a hefty $5.2 billion next.
Taxes on individuals also look likely to outperform official views by $1.2 billion in 2018-19, fading to $0.5 billion in 2019-20.
“The house price crash is a problem for the economy, but it’s a nothing burger for the Budget – remember that we don’t tax wealth, and that indirect wealth taxes such as capital gains receive overly generous treatment,” Richardson said.
“And although the house price crash will take bites out of the GST take, that downside hits grants to the States. That’s a budgetary bullet dodged.”
The downturn in house prices is now expected to have a limited effect on tax collection for the commonwealth, though will likely moderate consumer spending.
However, the shift in investment preferences could see household spending slow even further, weakening what is the largest part of the Australian economy and if it slows, the broader economy will almost inevitably slow with it.
“The news is otherwise pretty poor, with crashing house prices increasingly weighing on the willingness of families to spend,” Richardson said.
“That’s why indirect taxes may fall shy of Treasury forecasts by $0.5 billion in 2018-19, with that shortfall then blowing out to $1.6 billion in 2019-20.”