Treasurer Jim Chalmers announced a $50 billion improvement on 2021-2022 figures on Tuesday ahead of the budget release but warned the good news was “temporary”.
Mr Chalmers gave a preview of what can be anticipated in budget outcomes next Wednesday ahead of the Albanese Government’s first federal budget since taking office on October 25.
The Labor MP said the boost had been delivered by the former government through lower spending and stronger commodity prices.
Mr Chalmers welcomed the $50 billion development before alerting Australians that it was driven by “temporary factors”.
“The budget deficit for 21-22 will show an improvement of almost $50 billion from what was expected at budget time,” Mr Chalmers said.
“This substantial improvement is welcome but the bulk of it is driven by temporary factors.”
The factors referred to include $28 billion which came from increased revenue as commodity prices remained higher for longer than expected.
Mr Chalmers gave the example of iron ore which has since dropped drastically, falling 20 per cent since the end of June alone.
Another $20 billion came from lower than budgeted spending by the former government caused by delayed infrastructure projects and pandemic related supply chain issues which hindered construction.
Mr Chalmers used the news to foreshadow extra spending as the government tackled the competing pressures to fund ongoing programs not budgeted for by the Morrison government.
He also flagged spending for emergency programs like $5.5 billion in pandemic costs as well as an additional $2 billion in flood related relief where provisions were not made.
“I really encourage you not to see the improvement of 2021-2022 as an ongoing improvement,” he said.
“On the contrary, some of the improvements in the budget last year create additional issues for us and the expenditure review committee.”
Shadow treasurer Angus Taylor called for a more “comprehensive plan” from Labor to tackle the cost of living pressures that Australians are facing.
“We do know that Australians are facing very serious cost of living pressures right now… and what we haven’t seen from Labor is a plan,” Mr Taylor told Englishheadline Australia on Tuesday.
“He admitted just how strong the economy was and how strong the budget was – a $50 billion dollar windfall – and he’s only plan is to spend Australians money.
“The truth is they have no plan to deal with the cost of living pressures. That’s what we want to see from Labor.”
Mr Chalmers also reassured the public that the fuel excise relief program – which ends next Wednesday, September 28 – should not see petrol prices “skyrocket”.
The Treasurer said petrol prices had dropped 50 cents a litre across the nation since their peak in July, so there was a slight buffer already in place for an increase.
He also confirmed the Albanese Government had worked closely with service stations and suppliers to ensure consumers were not hit hard by the change as more than 700 million litres had been secured at a cheaper price.
“This is 700 hundred million reasons why the price shouldn’t shoot up by the full 23 cents on the night that the fuel excise ends,” Mr Chalmers said.
The Treasurer is anticipated to make further budget announcements next week before delivering his “bread and butter” budget on October 25.