Jim Chalmers avoids huge budget question – as he shoots down election rumour

Treasurer Jim Chalmers has declined to say whether the Commonwealth’s deficit has exceeded expectations ahead of a budget update.

While Dr. Chalmers would not say whether the deficit would be higher than the cumulative total forecast of $122.1 billion for the four years, he did indicate that there is some “slippage.”

‘You will see all the figures on Wednesday. There is not derailment every year,” Dr Chalmers told Sky News on Sunday.

“We’ve been able to do a little better in the short term, but there have been some slippages for reasons we’ve been honest about.”

Dr. Chalmers said the rising deficit was due to slowing economic growth, lower-than-expected mining exports and what he called “variations in spending” on Medicare, early childhood education and natural disasters.

There were also increases in veterans’ payments, which would increase spending by $1.8 billion.

“That’s because we’re closing the backlog that we inherited from the coalition,” Dr. Chalmers said.

“(We) are giving veterans the help they need and deserve, but that still comes with a $1.8 billion price tag, and that will be one of the very substantial pushes in the mid-year budget update, one of the few quite important pressures that we have had to adjust.’

Dr. Chalmers denied, as far as he knew, plans to call an election before the March budget to short-circuit criticism of the deteriorating results.

“Of course I see the commentary, and I see the pundits and the rest of them, as they always do, understandably speculating about the timing of the election,” he said.

“The timing of the elections is up to Anthony. From my point of view, and from (Finance Minister) Katy Gallagher’s point of view, we’re certainly preparing for a budget in March.”

“We have been working simultaneously on the interim budget update, which we released on Wednesday, and on the budget we are preparing for March.

‘We work day and night on these budgets.’

Shadow Treasurer Angus Taylor told Sky News the Budget was ‘falling off a cliff’, with government spending spiraling out of control as the economy posted a dismal record of seven consecutive quarters of per capita recession.

“This is a disastrous budget situation that reflects the government setting us on a path to economic ruin,” he said.

The May budget forecast a surplus of $9.3 billion for the 2024-25 financial year, followed by four consecutive deficits of $28.2 billion in 2025-26, $42.8 billion in 2026-27, 26.7 billion in 2027-28 and $24.3 billion in 2028-29. .

Dr. Chalmers indicated that higher spending on Medicare was one of the reasons for the budget deficit slide (stock image)

Recent figures show Australia’s economy is barely growing, despite record high immigration and government spending, as the country enters its longest-ever recession per capita.

The country’s gross domestic product grew by just 0.8 percent in the year to September.

Apart from Covid lockdowns, this represented the weakest level of economic activity in Australia since the 1991 recession, but it comes with untamed inflation, a litany of interest rate rises and some of the highest house prices in the world.

Australian Bureau of Statistics data shows GDP per capita shrank 1.5 percent over the year, extending the per capita recession that started in early 2023. The 0.3 percent decline in September marked the seventh consecutive quarter of decline.

The per capita decline is now worse than the crisis of the early 1980s, when Australia experienced double-digit unemployment and inflation.

One of Australia’s leading economists shared data last week showing that the country has fallen behind other developed countries in a key economic area over the past 12 months.

AMP chief economist Shane Oliver shared a graph on social media on Friday showing the change in labor productivity of more than 17 comparable economies over the past year, with Australia at the bottom of the rankings.

According to Oliver’s data, Australian labor productivity – a broad measure of the amount of product produced per labor hour – is expected to fall by more than 1 percent by 2024.