Mid-year budget update will flag billions in extra spending pressures
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The news: The federal government’s mid-year economic forecast and outlook will highlight billions of dollars in additional spending pressures across disaster relief, age pension and defence benefits and entitlements.
The numbers: Among the biggest additional spending pressures that will be flagged in MYEFO 2025-26 are:
- Natural Disaster Relief: An additional $6.3 billion in Natural Disaster Relief as previous disasters end up being more costly than previously expected
- Age Pension: $3 billion more in support for seniors
- Defence Force Superannuation Benefits: $2.1 billion more for military superannuation schemes
- Veterans’ entitlements: an extra $1.3 billion will be spent on health and other care services, taking total additional payments to $15.2 billion since the Albanese government came to power.
The context: When credit-rating agency Fitch reaffirmed Australia’s AAA rating in October it had flagged that “structural spending pressure presents risks to our fiscal outlook”, highlighting NDIS, aged care, health and defence costs in particular.
Overnight it was reported that Treasury is doubling its forecast for business investment in 2025-26 in the upcoming budget update, due to be released next week. In November, the federal government said its budget position was $6 billion better than expected.
What they said: “The biggest job in the mid-year update has been making room for unavoidable pressures and payments without a substantial deterioration in the bottom line,” Treasurer Jim Chalmers said.
“While we’ve already delivered a substantial improvement to the bottom line, estimates variations across a range of areas are putting considerable pressure on the budget," he said.
“Our predecessors underfunded services and shamefully shortchanged veterans, but we take our responsibility to these people very seriously and we’ll always make room in the budget to do the right thing by these Australians.”
The source: Treasurer Jim Chalmers statement
