Treasurer Jim Chalmers will present back-to-back budgets in the black, with new forecasts for the country’s finances for the current budget year showing a surplus of $9.3 billion.
But even with the significant turnaround since the mid-year budget update (MYEFO) forecast a razor-thin deficit of $1.1 billion just six months ago, the budget will be back in the red from next financial year as rising spending and rising unemployment puts pressure on the economy. bottom line.
Announcing the result, Mr Chalmers said the expected surplus did not come at the expense of expected cost-of-living relief.
“Another surplus is a strong demonstration of Labour’s responsible economic management, making room for cost-of-living relief and investment in the future,” he added.
Treasurer Jim Chalmers will present back-to-back budgets in the black, with new forecasts of the country’s finances for the current fiscal year showing a $9.3 billion surplus
“Despite the substantial progress we have made, spending pressures continue to mount and more work needs to be done to clean up the mess left by the Coalition.”
Although the forecast deficits for the next three financial years are not yet known, they are expected to be larger than the combined deficits of US$73.3 billion forecast in MYEFO.
Rising NDIS cost growth, government debt interest rates, health and aged care spending and record defense spending will put greater pressure on budget outcomes in the short term.
However, the fiscal position will be stronger in 2027-2028 compared to December forecasts, which showed the budget still in the red.
“We are committed to responsible economic management that strikes the right balance between strengthening the budget and financing our priorities,” said Finance Minister Katy Gallagher.
Buoyed by huge revenue windfalls from Australia’s red-hot labor market, still high commodity profits and strong corporate tax revenues, public coffers have grown since Labor came to power.
Without rising Commonwealth tax revenues, the budget would have been in structural deficit.
The lion’s share of revenues this financial year will go towards reducing the budget’s bottom line, with 96 percent of revenue increases expected to be invested. The remaining funds will cover increases in government payments.
To meet rising spending demands, Labor has already announced it will reallocate $23.1 billion in previously allocated funds and save $1 billion by reducing the government’s reliance on consultants.
Another $3.8 billion in cuts and reprioritizations will be unveiled on budget night.
Despite the budget upgrades, gross debt is still expected to exceed $1 trillion over the next four years, a threshold for which Mr Chalmers regularly criticized the then Morrison government during his time in opposition.