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Budget 2024: Jim Chalmers forecasts a surplus of $9.3 billion… but bad news is on the horizon

Treasurer Jim Chalmers will deliver back-to-back budgets in the black, with new forecasts for the national finances expected to show a $9.3 billion surplus for the current financial year.

But even with the significant turnaround since the Mid-Year Budget Update (MYEFO) projected a razor-thin deficit of $1.1 billion just six months ago, the budget will fall back into the red from next fiscal year as rising spending and rising unemployment will make the problem worse. at the end of the line.

Each of the next three years will see higher deficits than the government previously forecast, thanks to what it calls “unavoidable spending.”

The exact numbers for these deficits have not yet been revealed, but they were forecast in December at $18.8 billion, $35.1 billion and $19.5 billion.

Treasurer Jim Chalmers will deliver back-to-back positive budgets, with new forecasts the national finances are expected to show a surplus of $9.3 billion for the current financial year.

Treasurer Jim Chalmers will deliver back-to-back positive budgets, with new forecasts the national finances are expected to show a surplus of $9.3 billion for the current financial year.

Announcing the result, Mr Chalmers said the projected surplus had not come at the expense of expected cost of living relief.

“Another surplus is a powerful demonstration of Labor’s responsible economic management, paving the way for lower living costs and investment in the future,” he added.

“Despite the substantial progress we have made, spending pressures continue to intensify and there is still work to do to clean up the mess left by the Coalition.”

Although the projected deficits for the next three fiscal years are not yet known, they are expected to exceed the combined deficits of $73.3 billion projected in the MYEFO.

Indeed, the staggering growth in NDIS costs, the interest bill on the public debt, health and aged care spending, and record defense spending will put increased pressure on the fiscal bottom line. short term.

The budgetary situation will, however, be more solid in 2027-28 compared to December forecasts which showed that the budget still remained in the red.

“We place great importance on responsible economic management that strikes the right balance between strengthening the budget and funding our priorities,” said Finance Minister Katy Gallagher.

Buoyed by soaring incomes from Australia’s overheating labor market, continued high commodity profits and strong corporate tax receipts, Treasury coffers have swelled since Labor came to power.

Without skyrocketing Commonwealth taxes, the budget would have run a structural deficit.

The lion’s share of revenue this fiscal year will be spent on reducing the budgetary bottom line, with 96 percent of revenue increases earmarked for banking. The remaining funds will cover increases in government payments.

To meet growing spending demands, Labor has already announced it will reallocate $23.1 billion of previously allocated funds and save $1 billion by reducing the government’s reliance on consultants.

Another $3.8 billion in savings and reprioritizations will be revealed on budget night.

Despite the improvements in financial results from this budget, gross debt is still expected to reach $1 trillion over the four-year forecast period, a threshold for which Mr Chalmers regularly criticized the then Morrison government during its mandate in opposition.

Cost of living crisisJim Chalmers

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