Budget Boost
The federal budget is set to receive an $18 billion boost due to a stronger-than-expected jobs market. This news comes as the final budget outcome for 2024/25 is set to be released, showing a deficit of just under $10 billion. This is a significant improvement from the initial forecast of over $28 billion.
Reasons for the Uptick
A robust jobs market and a rise in take-home pay for workers are among the key factors contributing to the budget’s improved performance. Treasurer Jim Chalmers attributes the success to these factors, as well as budget revenue upgrades being banked and spending restraint by the Commonwealth.
Budget Performance
The overall budget deficit for the last full financial year is expected to be 0.4 per cent of Australia’s gross domestic product. This is a notable achievement, with the treasurer stating that the government has made more progress on the budget in three years than any government in history. The government has turned two big Liberal deficits into two substantial Labor surpluses in their first two years, significantly reduced the deficit in their third year, and continued to pay down debt.
Revenue Upgrades and Spending Restraint
The government has banked an estimated 70 per cent of revenue upgrades in the past three years. This, combined with spending restraint, has contributed to the lower deficit levels. The treasurer notes that responsible economic management is the hallmark of the Albanese Labor government, and the latest budget outcome reinforces this.
Interest Rates and Inflation
The release of the budget paper coincides with the Reserve Bank’s deliberations on whether to cut interest rates again. However, with monthly inflation rising from 2.8 per cent to three per cent in August, expectations of further mortgage relief have been dampened. The central bank is widely expected to keep the official cash rate on hold at 3.6 per cent.
Conclusion
The federal budget’s improved performance is a significant achievement, thanks to a strong jobs market and responsible economic management. With the deficit set to be lower than forecast, the government can continue to invest in key areas and pay down debt. As the economy continues to evolve, it will be important to monitor the budget’s performance and make adjustments as needed to ensure continued economic growth and stability.
