Budget Surplus Grows: Treasurer Jim Chalmers to Unveil Surprise Cash Boost for Government Bottom Line
- Government budget records $4.2 billion surplus in May
- This figure has since increased to $22.1 billion
- First surplus recorded since Peter Costello’s final budget in 2007
Treasurer Jim Chalmers is expected to reveal an improvement in the budget result of almost $18 billion, bringing the underlying cash surplus to $22.1 billion.
The government will officially release final figures for the 2022-23 budget on Friday, showing the first surplus recorded since Peter Costello’s final budget in 2007.
In May, the budget projected a smaller surplus, at $4.2 billion.
The result follows a boom in commodity prices and a surge in tax revenues that led to higher-than-expected revenue growth. At the same time, payments are expected to be lower than expected with unemployment at a near-record high.
Speaking ahead of the release of the final Budget result on Friday, Dr Chalmers said the results were evidence of the Government’s responsible economic management and control of spending.
The Federal Treasurer (pictured with his wife Laura) will unveil a major improvement in the government’s budget results on Friday.
“Our responsible fiscal management has not only generated the first surplus in 15 years, it has also eased pressure on inflation, interest rates and the cost of living,” he said.
But Dr Chalmers said the budget still faced long-term challenges and implementing structural savings would require multiple election cycles.
“Despite the surplus for 2022-23, structural pressures are intensifying rather than easing on the budget and will take more than a year or a legislature to resolve.”
The Sixth Intergenerational Report, released in August, found that the federal budget would fall back into deficit starting in 2024 and stay there for the next 40 years.
Although Chalmers did not specifically mention the effect of commodity prices on budgetary outcomes, their contribution to Treasury coffers is expected to be substantial.
In the May budget, Treasury officials were forced to revise upward their forecasts on commodity prices.
The federal government will announce a budget surplus of $22.1 billion, an increase of almost $18 billion since the May budget.
The Treasury also projects that it will take four quarters, instead of the two initially forecast, for iron ore and coal prices to return to their long-term averages.
“Prices have also been increased slightly to reflect recent developments in commodity markets, inflation in the mining industry and updated assessments of long-term supply and demand fundamentals,” it said. budget documents.
“Assumptions for commodity prices remain conservative and at the lower end of market expectations.”
At the time, the revision generated $22 billion in additional revenue for the budget bottom line.
However, despite revised assumptions that the iron ore price would fall to $60 per tonne by the end of March next year, it has since climbed to $121.80 per tonne.
Soaring commodity prices helped replenish government coffers (stock image)
Coal prices also continue to defy budget assumptions, rising 20 percent since June.
Federal and state treasuries have a history of understating commodity prices during boom times, allowing governments to profit from any price spikes.
In an interview with 5AA on Friday, Prime Minister Anthony Albanese downplayed the contribution of commodity prices.
“This is only a very minor part of what has been achieved,” Mr Albanese said.
“It’s important, but it’s not the only factor.”
Deficits are forecast for the next 40 years, although Australia recorded a surplus in the 2022-23 financial year. Pictured is Jim Chalmers during Question Time