Treasurer Jim Chalmers has handed down the mid-year economic and fiscal outlook, confirming that the budget is expected to slip into deeper deficits over the next four years, as better-than-expected revenues remain outpaced by spending pressures.
Chalmers and finance minister Katy Gallagher announced the update to press on Wednesday, seeing Labor’s two full-year budget surpluses streak end with a deficit, albeit a deficit that is $1.3 billion less than originally projected back in the May budget.
The budget will likely see a total deficit of $26.9 billion for this financial year and is not projected to return to balance for a decade, around 2035.
Chalmers and Gallagher said that the result is “almost half the $47.1 billion deficit we inherited for this year from our predecessors”.
Tax revenues are stronger than was expected, largely due to low unemployment, but government expenses have also been expanding faster than forecast earlier in the year.
Chalmers said he believes it is a "responsible set of books" with “substantial” progress made since the last election while Gallagher said "unavoidable spending" was the cause for "slippages" in the budget.
The treasurer also acknowledged the $5.5 billion, set aside in the 'decisions taken not yet announced' category, which is usually expected in a Mid-Year Economic and Fiscal Outlook (MYEFO) taking place before an election.
“That's a relatively small number by historical comparisons, particularly in the lead up to an election,” He said.