Australia is set to achieve its first balanced annual budget in 15 years, according to Treasurer Jim Chalmers. The country’s economic blueprint for next year will ease financial hardships without increasing inflation, he said. High prices for commodities, as well as income tax revenue buoyed by an unemployment rate of just 3.5%, have boosted expectations. Although the size of the surplus was not disclosed, several media outlets suggest it will be worth AUD4bn ($2.7bn).
The interim budget forecast released by the government in October 2021 predicted a AUD36.9bn ($25bn) deficit for the current fiscal year. This was far lower than the AUD78bn ($53bn) forecast by the previous government in March 2021. In addition, last year’s forecast put gross debt at 37.3% of GDP, or AUD927bn ($628bn), with predictions it would continue to rise through the decade.
Next year’s budget will include AUD14.6bn ($9.9bn) in measures to assist low and middle-income earners dealing with inflation, which slowed from 7.8% in December 2021 to 7% in March 2022. However, inflation remains too high according to the Reserve Bank of Australia, which raised its benchmark interest rate by a quarter percentage point to 3.85% last week. It marked the 11th increase since May 2021.
Despite the positive news, Chalmers warned that economic pressures, including inflation, would push Australia deeper into debt in the coming years. He described the new budget as “carefully calibrated to address cost of living pressures in our communities, rather than add to them”. The budget will include the initial costs of the AUKUS agreement with the US and UK, which will deliver eight submarines powered by US nuclear technology to Australia, but this is likely to add to future pressures.
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