Australia set to return to budget surplus
Australia is expected to receive a balanced federal budget for the first time in 15 years — but it isn’t likely to last long.
After days of speculation, Jim Chalmers confirmed the budget he will hand down on Tuesday night is forecast to record a “small” surplus of $4bn for the 2022-2023 financial year.
However, the budget is then expected to return to deficit for the next four years, in part because of spending pressures on the National Disability Insurance Scheme, aged care, health, defence and debt interest repayments.
The Albanese government says these deficits will be smaller compared to previous forecasts, but it is yet to reveal the exact amounts.
The Treasurer said Labor had achieved the expected surplus through spending restraint, “modest but meaningful tax changes” and “substantial savings redirected to other priorities”.
“What’s absolutely clear is that this outcome would never have been possible without our decision to return most of the upward revisions to revenue to the bottom line,” he said on Monday.
“Debt and deficits would be bigger and the inflation challenge even more serious if we’d followed the path taken by our predecessors.”
The temporary return to surplus will be made possible in part by the government’s decision to save and redirect $17.8bn.
This includes $7.8bn worth of defence projects that will be shifted within the portfolio in order to start funding the recommendations of the defence strategic review.
The Albanese government made an additional $22bn worth of “savings and reprioritisations” in the October budget, taking total savings to $40m at this stage of its first term in office.
Labor will draw from this pool of funds to pay for to what it deems to be higher-quality investments and priorities, such as its $14.6bn cost-of-living package.
The centrepiece package to help Australians cope with high inflation will include measures such as energy rebates for some low-income households and eligible small businesses, which will be jointly funded with the states and territories.
The federal government says it is returning 82 per cent of revenue upgrades in this budget and 87 per cent across its first two budgets to the bottom line.
High commodity prices have driven up the cost of iron ore, coal and gas exports which, coupled with higher tax revenues, are forecast have created a windfall that will help the government balance the books and return the budget to surplus.
The government says the budget will improve by more than $143bn over four years to the 2025-2026 financial year, compared with the Morrison government’s final budget for 2022-2023.