‘Sensible’ Labor to unveil $17b savings

Tuesday’s budget is set to reveal more than $17 billion in savings will be re-diverted in order to fund a suite of budget measures. Picture: NCA NewsWire / Martin Ollman

Labor’s upcoming budget is set to reveal that a “sensible” audit will ensure more than $17b in savings will be diverted in order to fund a suite of higher-priority measures.

As the Treasurer drops hints about handing down the first surplus budget since Kevin Rudd was Prime Minister, new detail has emerged about the state of the nation’s coffers.

The $17.8b in “savings and reprioritisations” over the next five years follows the $22 billion figure announced in the October budget. The culmination will allow Labor to fund what it deems higher-quality investments and priorities, like it’s $14.6 billion cost of living package.

Of the savings in this budget, $7.8b alone is within the Defence department, with the money to be reinvested as part of the government’s response to the Defence Strategic Review.

The remaining $10bn has come from “finding sensible savings” in programs and services within departments.

Further savings and reprioritisations have been identified right across government agencies, and will be detailed on Tuesday.

Treasurer Jim Chalmers and Finance Minister Katy Gallagher have in the year since winning office reiterated the “difficulty” in repairing the budget, after inheriting significant structural deficit and more than $1 trillion in debt.

They’ve warned that even if there is a surplus in the short term, the medium-term will still be plagued by significant strain.

AUSTRALIA - NewsWire Photos - General view editorial generic stock photo of Australian cash money currency. Picture: NCA NewsWire / Nicholas Eagar
The government has found $17.8bn in savings. Picture: NCA NewsWire / Nicholas Eagar

Senator Gallagher said the figures were proof the government was committed to making the budget more sustainable.

She talked down claims the government had been taking a “slash and cut and burn” approach, rather making a careful assessment of the true state of the budget.

“It’s been around how do we look at the existing money we have flowing through the budget, and how do we reprioritise that into current pressures or future needs,” she told ABC News.

“This can’t be an exercise in adding on all the time … I think that’s very good fiscal discipline, and ministers have been very cooperative with that approach.”

Conceding it wasn’t a “small amount of money”, Senator Gallagher reiterated it was “sensible” and wouldn’t leave people in the lurch.

“It’s making sure we get the best bang for buck that we can. It delivers the outcomes we want, it’s tailored to current pressures, and we’re being really thoughtful,” she said.

The ‘reprioritisation’ of funds will allow Labor to roll out its budget promises. Picture: NCA NewsWire / Martin Ollman

While Dr Chalmers would on Sunday not reveal whether the budget would be briefly back in black, he said the “substantial improvement’ in the near-term budget bottom line was driven mostly by a strong jobs market.

It’s understood about 40 per cent of the revenue upgrade is because of significant employment growth and a pick-up in wages growth; while 20 per cent is attributable to higher commodity prices.

The remaining 40 per cent is a result of greater revenue from other sources.

Dr Chalmers said more broadly the government’s “responsible approach” to its first two budgets had made a significant difference.

“My focus really is to try and get the budget in as good a nick as we can,” he told Sky News.

“There will be substantial improvement in the near term, but it gets difficult after that as the pressures intensify, rather than appease.”