Treasurer reveals $50b budget turnaround

·2-min read

The federal budget recorded a $50 billion improvement in its bottom line last financial year, but the treasurer warns the turnaround is temporary.

Jim Chalmers revealed on Tuesday the final budget outcome for 2021/22 - to be released in full next Wednesday - would be $50 billion better then predicted due to $28b in higher-than-expected revenues and $20b of lower payments.

Dr Chalmers said the budget turnaround had been driven by higher commodity prices, but those were beginning to drop.

And a raft of spending by the Morrison government had not gone ahead, including COVID-19 support payments for businesses.

He said it was important to inform the public that the "temporary improvement" in the budget bottom line for the previous year "now becomes an issue for this government to deal with in 22/23 and beyond".

Because of the Morrison government's over-promising and under-delivering, much of the spending would be pushed into subsequent years, he said.

Finance Minister Katy Gallagher said this had been seen already with the Labor government having to announce $1.4b in extra pandemic support and $2b for flood-related costs.

"On top of that ... there are a range of other programs right across the public service where they were funded for the short term but they are ongoing programs," she said.

Dr Chalmers said the budget deficit for the current financial year was still expected to be upwards of $30b, but the government was seeking to "sensibly, responsibly reprofile some of the spending that our predecessor has promised but never delivered".

He said his October 25 economic blueprint would be a "bread and butter budget" aimed at funding election pledges, while future budgets would deal with big picture issues.

"(The budget) is the beginning, not the end, of a big national conversation about the structural position of the budget, and how we fund the things that we value, not just in our economy but in our society."

Dr Chalmers said the cost of living would be addressed in the budget, but it was important that spending had an economic benefit while not adding to inflation.

Shadow treasurer Angus Taylor hit out at the government, saying the $50b shouldn't be all spent when cost of living relief was needed.

"That fifty-billion dollar windfall shouldn't be spent the way Labor has claimed it should be. This is money that belongs to Australians," he told reporters in Sydney.

"What we need is a clear plan to deal with the inflation and cost of living pressures Australians are facing."

Mr Taylor warned the upcoming budget would feature higher spending and taxes.

"(The treasurer) doesn't want to admit that he's inherited a strong economy and a very strong budget," he said.

"We saw no plan other than spending Australians' money."