Budget to sink back to $28.3b deficit in 24-25 after back-to-back surpluses
Make us a preferred source
Make us a preferred source on Google
The news: Treasurer Jim Chalmers expects to deliver a $28.3 billion deficit in 2024-25 after two back-to-back surpluses, according to the official budget papers. The budget contains new cost of relief measures and billions of dollars in extra spending to support the government’s Future Made in Australia policy.
The numbers: The government is expecting to deliver a $9.3 billion surplus in 2023-24 but is forecasting deficits for the rest of the forward estimates. This includes a $28.3 billion deficit in 2024-25, followed by a $42.8 billion deficit in 2025-26. This recovers slightly to a $26.7 billion deficit in 2026-27 and $24.3 billion in 2027-28.
Inflation is tipped to hit 3.5% this financial year before dipping to 2.75% in 2024-25. Real GDP growth is forecast to be 1.75% in 2023-24 and then hit 2% in 2024-25 and remain relatively sluggish over the forward estimates.
The budget contained cost-of-living relief initiatives including $3.5 billion in energy bill relief for 10 million households and a 10% lift in the maximum rate of Commonwealth Rent Assistance worth $1.9 billion over the next five years.
The Future Made in Australia policy is the other major spending area, worth $22.7 billion over the next decade. $6.7 billion has been earmarked for the production of renewable hydrogen, $1.7 billion for net zero innovation and $466.4 million in federal funding in a deal with quantum computing firm PsiQuantum in partnership with the Queensland government.
Another $6.2 billion worth of investment in new housing has been allocated in the budget, including extra housing for students, the rent assistance payments, $1 billion for states and territories and social housing measures.
The context: The budget is being delivered against the backdrop of a difficult political environment for the government, which is neck and neck with the Coalition in most polls. The treasurer is facing a delicate balance to ensure his cost-of-living relief measures aren’t inflationary while also tackling future growth prospects for the economy. There’s also been pressure to deliver on housing, with rents soaring and young people increasingly locked out of the property market.
What they said: “It’s framed in fraught and fragile global conditions … [but] despite everything coming at us, we are among the best placed economies to manage these uncertainties,” Chalmers said in his 2024 budget speech.
“We are realistic about the pressures people face now, and optimistic about the future ... This is a budget for the here-and-now and it’s a budget for the decades to come.”
The source: Budget papers 2024-25
