Jim Chalmers has confirmed next Tuesday’s budget will unveil a deficit close to the $26.9bn predicted at the December update, as he flagged that the windfall tax gains from high commodity prices and a booming jobs market were now a thing of the past.
The government has had to scramble to finalise a fourth Labor budget after ex-Tropical Cyclone Alfred nixed plans to call an earlier April election.
But Chalmers in a speech in Brisbane welcomed the opportunity to put the economy “front and centre” in the upcoming election campaign. He warned that a vote for Peter Dutton risked torpedoing a fragile post-pandemic recovery.
“Because of all our efforts, inflation is down, incomes are strengthening, unemployment is very low, interest rates are coming down, debt is down and growth is picking up,” the treasurer said.
“This is a remarkable combination, and it’s exceptional; exceptional when you look around the world and when you look back through history,” he said, pointing to New Zealand’s struggle with recession.
Addressing the deficit, Chalmers said: “Revenue upgrades have actually come off very significantly since the highs of October 2022.
“Treasury doesn’t expect the bottom line this year or over the forward estimates to change very substantially from Myefo.”
After Labor delivered back-to-back surpluses, the Coalition will use Treasury forecasts of rolling deficits into the next decade to attack the Albanese government for mismanaging the country’s finances.
The treasurer’s scene-setting speech at the Queensland Media Club comes amid signs of a substantial rise in Anthony Albanese’s personal approval rating, according to the latest Guardian Essential poll.
A first RBA rate cut in four years in February and the government’s response to flooding in Queensland and northern New South Wales appears to have galvanised support for the prime minister over his opposite number, even as polls still suggest a swing against Labor on election day.
“The Australian economy has turned a corner,” Chalmers said.
“We saw that in the most recent national accounts which showed growth in our economy rebounded solidly. At the same time, real wages and living standards are growing again, supported by our tax cuts and the interest rate cut, and sentiment has been zigzagging up overall, as a consequence.
“These are all early and encouraging signs that momentum is building. We know people are still doing it tough and that’s why cost of living continues to be our major focus.”
Chalmers said the budget will contain provisions for further announcements to be made during the election campaign, and played down expectations of any new major spending next Tuesday.