Tuesday’s budget projects a surplus of about $4 billion for this fiscal year — the Commonwealth’s first budget surplus in a decade and a half.
The budget envisions an improvement of more than $143 billion over four years through 2025-26 compared to the coalition’s final budget, which was slashed by Josh Frydenberg last March.
The budget last ran a surplus in Coalition Prime Minister John Howard’s final year – 2007-2008. After the global financial crisis pushed it into a deficit, Frydenberg declared the budget “back to black” in 2019, but the COVID support measures never achieved the promised surplus.
While the budget is projected to run a deficit in the remaining years of the forward estimates, each year the deficits will be smaller than previously forecast.
Sales will be boosted by stronger than expected employment growth and record high commodity prices, both of which are expected to ease in the coming years.
The government will return 82% of the revenue upgrades in this budget and 87% in the first two budgets to the bottom line. It says this compares to an average of around 40% under the former government and 30% under the Howard administration.
Immediately upon returning to Australia after his coronation trip, Prime Minister Anthony Albanese confirmed that the budget will widen access to parental benefit (single) by raising the limit from when the parent’s youngest child is eight to age 14 .
At the moment, these parents – mostly women and often victims of domestic violence – have to switch to the lower JobKeeper benefit when their youngest turns eight. The change means that eligible single parents now working on JobSeeker will receive a raise of $176.90 every two weeks.
The issue was personally important to Albanese, who was raised by a single mother on a disability pension. Albanese opposed the Gillard government’s decision to tighten eligibility, which followed an earlier decision to limit parental payments by the Howard government.
Albanese said the government’s action “will make a big and immediate difference to tens of thousands of mothers, fathers and children across Australia”.
Read more: View from The Hill: Budget ‘midpoint’ will be $14.6 billion cost package
The change, which requires legislation, will take effect on September 20. It will cost $1.9 billion through 2026-27. Approximately 57,000 single primary carers will benefit, including 52,000 women.
The government announced last week that it would scrap the controversial ParentsNext program from next year, which imposed obligations on mothers with very young children.
Read more: Controversial ParentsNext program to be scrapped next year
The budget welfare decisions are expected to increase JobSeeker by a modest amount.
The budget will include $17.8 billion in savings and repurposing. This will bring total savings in Labor’s first two budgets to $40 billion.
The centerpiece of the budget is a package of measures designed to ease pressures on the cost of living, which has cost $14.6 billion over four years, including helping more than 500,000 households with their energy bills.
Speaking cheerfully to an enthusiastic Labor caucus meeting, Albanese said the budget would be “in the best tradition of the Australian Labor Party”.
It would address immediate challenges, “but always with an eye to the future, medium and long term, to ensure we deliver and lay the foundations for a brighter future that we promised”.
He said the budget would not only leave people behind, but would also be about “people’s pursuit of a better life”.
The caucus welcomed new Aston member, Mary Doyle, who took the Opposition seat in the April 1 by-election.
The government is focused on minimizing the inflationary impact of fiscal measures, with Albanians saying the caucus inflation was “a burden on the poor”. The opposition is preparing to make the central argument against the budget that it is inflationary.
Shadow Secretary Jane Hume said tackling inflation should be the number one priority. “If they really wanted to tackle the cost of living, they would tackle inflation first and foremost” by curbing spending.
Deputy Liberal leader Sussan Ley said any surplus the government would produce would be “because of the strong economic book they inherited from us”.