/ 10 May 2023

The Budget’s back in black, baby…

jim chalmers, budget, 2023
Treasurer Jim Chalmers at a press conference at Parliament House in Canberra, Wednesday, June 1, 2022. (AAP Image/Mick Tsikas) NO ARCHIVING

The Albanese Government has announced the thing that’s evaded every administration since John Howard’s last throw of the dice in 2007 – the Federal Budget is in surplus to the tune of $4.2 billion this financial year. That means the government is expected to take in a whopping $635 billion of revenue between July last year and the end of June this year and will spend a smidge less than that. But don’t get used to it – we’ll slip back into deficit from 2023-24 and stay there for at least the next 3 years. That means there are “difficult decisions” to come, Treasurer Jim Chalmers said last night as he outlined how the government had “carefully calibrated” its spending to help Aussies struggling with cost of living pressures (including $14.6 billion for welfare increases, bulk-billing incentives and energy bill discounts) while not adding to inflation that could push interest rates higher. 

• Back in March last year, it was predicted we’d have a deficit of $78 billion given all the pandemic spending, the struggles of coming out of it, and then the war in Ukraine. We’ve seen a massive turnaround in our financial fortunes thanks to high commodity prices and high employment.

• Even though we’re expected to go back into deficit next financial year, the improved budget position means our debt will be lower by a whopping $177 billion over coming years – and that means lower interest payments for the Commonwealth too. 

• But it’s not all Champagne and air kisses… Treasurer Chalmers reckons the economy will face its biggest challenge in 20 years outside of the Global Financial Crisis and the COVID response. Economic growth is forecast to halve next financial year to an anaemic 1.5% due to an expected collapse in household consumption (aka what you and I are spending), falling from 5.75% this financial year to 1.5% next year. 

Probably the most notable thing was a tripling of the incentive paid to GPs for bulk billing children, pensioners and other healthcare card holders – that will cost $3.5 billion. And there’s a modest increase to JobSeeker ($2.80 a day) and rent assistance (up to $15 a week). And that’s about it because the jazzy announcements were all made over the last couple of weeks. But we did hear more about where the government thinks some other key indicators are going. Unemployment is expected to rise to 4.25% next financial year from 3.5% today. Chalmers also reckons the worst of inflation is behind us, but it will stay higher than he’d like at 3.5% next year (down from 7% currently). And if you’re working, get ready for a pay rise… Wages are forecast to grow by 4% next year, which would mean a modest real increase for the first time in a while. Now for the key part of any Budget – it’s time to find out if you’re a winner or a loser

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