Next week’s federal budget will be expansionary, not contractionary as some economists have called for, and will do less to contain inflation and interest rate pressures than Jim Chalmers’ previous surplus budgets.
Already a subscriber?Treasurer Jim Chalmers is planning bigger budget deficits over the next four years than forecast six months ago, as a $25 billion tax windfall fails to cover a large jump in Albanese government spending., and will do less to contain inflation and interest rate pressures than his previous surplus budgets.
“It’s not just the quantity of spending that matters, it’s also the quality, timing, sequencing and shape of spending that makes a difference,” he said.Dr Chalmers is on track to post a second surplus in the current financial year, after saving about 95 per cent of the higher-than-expected revenue in 2023-24.
Dr Chalmers said the budget would “strike the right balance” between getting inflation under control, easing cost-of-living pressures and supporting economic growth.“Despite this more challenging outlook, cumulative deficits will be around half the level we inherited from our predecessors as a result of the Albanese government’s responsible budget management,” he said.
He expects the tax-to-GDP collections to exceed the former Coalition government’s 23.9 per cent cap in 2023-24. He expected the government to repeat claims that its cost-of-living help, such as for electricity bills, would lower inflation, but he disagreed.
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