$20bn surplus will be spent on paying debt rather than cost of living relief, Assistant Treasurer says

Australians hoping there could be more cost of living relief in the pipeline could be left disappointed with the government’s plans for the additional revenue.

The federal government has dashed hopes it will use a bigger-than-expected surplus to fund additional cost-of-living relief for Australians doing it tough.

Monthly figures, released by the Finance Department last week, showed that in the first 11 months of 2022-23 the budget was in surplus by $19bn, storming past the $4.2bn forecast in May.

Assistant Treasurer Stephen Jones on Monday morning confirmed the new figures are expected to show the surplus has swelled to “in and around” $20bn.

But he said the government would be looking to bank the extra revenue from record high company and personal taxes rather than roll out cost of living relief.

Assistant Treasurer Stephen Jones said the surplus would be used to pay down debt. Picture: NCA NewsWire / Gary Ramage

“It's a good number. But we’re focused on the medium term, not just one budget figure, and we know that there are structural problems with the budget,” he told ABC News Breakfast.

“Big expenses coming in aged care, the NDIS and defence. We have to be able to meet, not only this year’s and next year’s expenses, but well over into the future.”

The improvement in the financial year to date came off the back off a tight jobs market boosting tax revenue, higher than expected to the tune of $8.5bn.

Payments to May had come up $2bn below forecasts.

Inflation is now at 7 per cent after peaking at 7.8 per cent in the year to December.

The monthly measure, released last week, was at 5.6 per cent in the year to May, down from a peak of 8.4 per cent.

Mr Jones argued that dishing out payments to Australians while inflation remained high wouldn’t help solve the overall problem.

“Number one focus is paying down debt,” he said, emphasising policies that included an increased childcare subsidy and energy bill relief that has recently come into effect.

“But I want to make this point: Inflation is a problem.

“It looks like it is on the turn now and that's good news, but the worst thing that the federal government could do at the moment was to take that $19, $20bn … and dump it into the economy, which was already facing inflationary pressures.

“That's why restraint and paying down the trillion dollars worth of debt that we have on our books is our number one focus.”

Originally published as $20bn surplus will be spent on paying debt rather than cost of living relief, Assistant Treasurer says