Budget to confirm a surplus this year, but bigger deficits for the next three years

The federal budget will reveal a $9.3 billion surplus for the 2023-24 financial year, which ends next month.Tuesday's federal budget will deliver a $9.3 billion surplus for the current financial year ending in June.But the next three financial years will each have higher deficits than the government had expected as recently as December, owing to what it calls "unavoidable spending".

That means the RBA is now more pessimistic about inflation than the government, a reversal from earlier in the year. The RBA has indicated it is monitoring inflation carefully and leaving its options open on interest rates. At the same time, this year, it redesigned tax cuts due to start on July 1, leaving their magnitude roughly unchanged.

The government has previously touted its record of banking most of its revenue upgrades, a major reason why it has delivered two surpluses. On Sunday, Shadow Treasurer Angus Taylor said the government should be "restrained in spending … We've seen a government that loves to spend, it's their natural instinct".

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