Federal Treasurer Jim Chalmers tonight will unveil a projected budget surplus of $9.3 billion, the first back-to-back surplus since the Global Financial Crisis. This is a significant change from the small deficit that was projected at the most recent mid-year budget update as revenues have remained high in the first few months of 2024.
The budget is however expected to return to deficit in the next couple of years as revenues decline – mostly from tax cuts, expected rises in unemployment and slowing household spending.
The government have mentioned that there will be cost-of-living relief as well further information on their ‘Future Made in Australia’ agenda in this budget. The government has repeatedly claimed that the budget will be responsible and will put downward pressure on inflation.
Elsewhere, Treasurer Chalmers has made a bullish prediction that inflation will be back within the 2 – 3% target range by Christmas, well in advance of when the Reserve Bank (RBA) expects it to be. This bold claim has been made in the belief that the upcoming budget will contain measures that will bring down inflation, and considers the upcoming budget, something that the RBA forecasts do not.
Economists are broadly skeptical of this claim, however. The most recent RBA decisions noted that “in the near term, inflation is forecast to be higher”, which could lead to interest rates remaining higher for longer.
The South Australian Business Chamber will have further coverage of the federal budget in the coming days.
