Budget boost as commodities, employment prop up deficit
The federal budget bottom line is looking rosier than expected, with the 2022/23 deficit forecast to be less than half as big as had been feared.
Treasurer Jim Chalmers and Prime Minister Anthony Albanese. Photo: AAP/Mick Tsikas
It is tipped to reach $36.9 billion, well shy of the $78 billion that was predicted in the March budget delivered by the coalition government.
High commodity prices and strong employment are anticipated to keep propping up the public purse, although this boost to revenue is expected to begin slowing down after two years.
Treasury expects this boost to the bottom line to dry up just as spending pressures start to mount.
For example, spending on health and aged care will total $548 billion over the next four years, the government has revealed pre-budget, and hit $135.3 billion this financial year.
This means deficits will actually worsen towards the end of the forward estimates compared to earlier forecasts.
Still, combined with “restrained” spending, the Albanese government hopes to shave $42 billion off expected government debt over the next four years.
In the March budget, gross debt was expected to hit over a trillion dollars ($1056 billion) in 2023/24 and climb to $1169 billion in 2025/26.
“We are putting a premium on restraint and resilience because that’s what the times call for,” Treasurer Jim Chalmers said in reference to the high inflation environment.
“We’ve been left with a trillion dollars of debt and a budget deep in structural deficit, but hard decisions mean we can still deliver our commitments, keep spending under control, and start down the long road of budget repair.”
The opposition says the Labor government has inherited a budget in a relatively strong position considering the pandemic, with unemployment at record lows and the improving budget bottom line.
The Albanese government’s first budget, to be delivered in parliament by Chalmers at 7pm ACDT, will flag new measures of “wellbeing” and outline a package of support for women.
Regional spending promised by the former Morrison government will be re-prioritised under new grants schemes, two of which will share a $1 billion budget over three years.
A number of road and rail projects promised by the coalition will not go ahead, with Labor instead funding the infrastructure priorities it put to voters in May.
There are also expected to be significant savings as consultants, labour hire, advertising and public servants’ travel is cut back.
Alongside aged care and health, disability services and defence are expected to be the biggest areas of spending.
-AAP
