Jim Chalmers confirms deficit in next week’s federal budget
Federal Treasurer Jim Chalmers has confirmed the brief era of budget surpluses will end next week, when he will hand down a budget in deficit.
A decade of budgets in the red has been forecast by the federal government for some time, but a weak Australian dollar had increased revenues from minerals exports and fuelled speculation the treasurer might be able to eke out one last surplus.
Mr Chalmers confirmed on Monday morning that, as predicted, next week he would hand down a budget with a deficit forecast for this year.
“A defining feature of our first three budgets was responsible economic management. That will be a defining feature of the fourth as well,” Mr Chalmers said.
“Even this year, where we will be printing a deficit for this year, it will be much, much smaller than what we inherited from our political opponents, and that shows the progress we have been able to make.”
The government delivered two surpluses back-to-back, for the first time in a decade — thanks in particular to low unemployment delivering more income tax revenue, and higher-than-expected coal and mineral export prices.
But with structural issues in the budget remaining and an ongoing cost-of-living crisis, the Coalition has been pointing to how much taxpayers are forking over, releasing figures overnight that targeted average tax paid in the nation’s most marginal electorates.
Shadow Treasurer Angus Taylor will tour a number of those electorates this week, raising income tax as an issue — though the Coalition is yet to state any policy of its own to reduce income tax.
The Coalition’s analysis, released by the shadow treasurer, suggested the average amount of tax Australians would pay this year would be $3,500 higher than in 2021-22, as rising wages pushed more earnings into higher tax brackets.
“These are the pains that Australians are feeling. We need a budget that restores Australians’ standard of living,” Mr Taylor said.
“It is clear taxes are on the rise if Labor’s policy settings continue. Labor abolished the tax cap in its first budget, the Coalition will restore it.”
Shadow Treasurer Angus Taylor says the average Australian is paying thousands more in taxes than they were three years ago. (ABC News: Marcus Stimson)
The treasurer dismissed the Coalition’s promise, raised again by Mr Taylor, to reintroduce its self-imposed cap on revenue raising.
The Coalition says it will reinstate its tax-to-GDP ratio cap of 23.9 per cent if it wins the next election.
While Mr Chalmers dumped that cap when Labor took power in 2022, calling it arbitrary, the government has also kept taxation under that level.
The treasurer said on Monday the only government that had ever exceeded that ratio was John Howard’s.
Australia’s tax-to-GDP ratio, including state and local taxes, remains below the OECD average.
