An extra $25 billion not enough to guarantee more budget surpluses

Treasurer Jim Chalmers will loosen the nation’s purse strings in next week’s budget, with a $25 billion improvement in tax collections over the next four years not enough to offset an increase in spending and “unavoidable” cost blowouts.

Despite the extra cash, Chalmers is expected to reveal that the budget position, and a likely surplus in the current financial year, will be worse from 2024-25 and in the years following. “That’s why the May budget will be carefully calibrated to the economic circumstances, striking the right balance between getting inflation under control, easing cost of living pressures, supporting sustainable growth and building fiscal buffers in an uncertain global environment.

Founder of Rich Insight, economist Chris Richardson, said if the budget did not include any extra spending it would be on track for a surplus of $13.4 billion this financial year before moving to a $14 billion deficit in 2024-25. ‘The government will desperately want at least one interest rate cut under its belt before going to the polls.’“Rising defence and NDIS and NDIS-related spending pressures are enormous, while the revenue surge of recent years is slowly passing,” he said.

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