‘Clown show’: Triumphant Treasurer to announce back to back $9.3 billion surplus that eluded Scott Morrison
Treasurer Jim Chalmers is set to announce a back-to-back surplus of $9.3 billion on the federal budget which hasn’t been seen for two decades.
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Treasurer Jim Chalmers is set to announce a back-to-back surplus of $9.3 billion on budget night for the first time in almost two decades.
As the government prepares to unveil energy bill relief, tax cuts and an extension of the instant asset write-offs for business, the Treasurer is set to claim a big prize that eluded his predecessors.
Despite the bizarre promises of the Morrison Government that the budget was “back in black” way back in 2019, Scott Morrison and his Treasurer Josh Frydenberg never delivered a surplus as forecast.
Instead, the arrival of Covid-19 plunged the budget back into deficit.
Last year, Australia recorded a final budget surplus of A$22.1 billion ($14.2 billion) for the year to June 2023, five times earlier than original estimates.
News.com.au has confirmed that the Treasurer is set to deliver the first back-to-back surplus since 2007-7 ($17 billion) and 2007-08 ($20 billion),
“Another surplus is a powerful demonstration of Labor’s responsible economic management, which makes room for cost-of-living relief and investments in the future,’’ Treasurer Jim Chalmers said.
“The forecasted surplus has come on top, not at the expense of helping those doing it tough.”
While the size of the surplus has been slashed to $9.3 billion, Jim Chalmers is still the first Treasurer to deliver consecutive surpluses in two decades.
The last time that happened Peter Costello was still in the job, after a decade that included announcing the baby bonus in 2002 and the first homeowners grant that was supposed to ease the housing crisis way back in 2000.
The Treasurer is expected to unveil more cost of living measures in Tuesday’s budget but he insisted they were tailor-made to ensure they do not fuel inflation.
”The Budget will ease cost-of-living pressures, not add to them, and incentivise investment in a Future Made in Australia,’’ he said.
“Despite the substantial progress we’ve made, spending pressures continue to intensify and there’s more work to do to clean up the mess left behind by the Coalition.”
Treasurer Jim Chalmers lashes “clown show” under the Morrison Government
“When we came to office, inflation had a six in front of it, and now it has a three in front of it,’’ he said.
“We’re not taking lectures from the same Liberal and National clown show which left us higher and rising inflation, more debt, and much bigger deficits.”
Compared to the time of the mid-year update in December, the budget will show an improvement of $10.5 billion (MYEFO forecast a deficit of $1.1 billion in 2023-24).
The Budget position between 2024-25 and 2026-27 will be weaker compared to MYEFO but much stronger than PEFO.
In a statement, the government said investments in future drivers of growth in the economy were a contributor and claimed the majority of the deterioration is a result of the need to fund unavoidable spending, including extending programs left to terminate by the former government.
Real spending is expected to average 1.4 per cent over the period since the Labour Party came to Government to 2027-28.
This is around a third of the rate of the former government – who averaged 4.1 per cent over their period in office.
Interest rate cut hopes
Mr Chalmers has revived hopes of an interest-rate cut later this year with a bullish prediction that inflation could be back within the Reserve Bank’s 2 per cent to 3 per cent target band by Christmas.
As he prepares to hand down Tuesday’s federal budget, the government’s new inflation forecasts are lower than those issued by the Reserve Bank of Australia.
And while there will be cost of living relief in the budget, he’s insisted it won’t fuel inflation and further rate rises.
“We need to engage in this inflation fight because it’s not finished yet, but we need to do that in a way that doesn’t smash the economy. It won’t be a slash and burn budget because people are doing it tough and the economy’s soft,” the Treasurer said.
While the Treasurer is not promising a rate cut, the independent RBA has made it clear that a rate cut won’t happen until inflation is under better control.
As day follows night, any faster-than-expected fall in inflation will fuel hopes that relief is on the way for homeowners.
Finance Minister Katy Gallagher also responded to criticism that the government should make deeper spending cuts to tackle inflation.
“Our budget discipline means we’ve found more than $77 billion in savings and reprioritisations since coming to office, redirecting this spending towards the services that Australians rely upon,’’ she said.
“We understand there’s still pressures on the Budget, including spending on the NDIS, aged care, hospitals, Medicare and debt interest.
“That’s why we’ve put a premium on responsible economic management that strikes the right balance between strengthening the Budget and funding our priorities.”
Scott Morrison’s faux surplus
Five years ago, when Scott Morrison announced his faux surplus, the ABC’s Leigh Sales began her interview with Treasurer Josh Frydenberg on budget night by offering a simple truth.
“You told the parliament the budget is back in the black. It is still in the red,” she said.
The Treasurer responded with an answer that the late, great John Clarke of Clarke and Dawe fame would have included in one of his political sketches.
“It is a surplus,” Mr Frydenberg insisted.
Except, it wasn’t. It’s a forecast surplus for 2019-20 of $7.1 billion. That year, the budget is still in deficit.
Mr Frydenberg insisted it was “credible trajectory” over the next four years.
But surely, Mr Frydenberg was pressed, it might not happen?
“No, it will happen,” he promised.
It didn’t. And the rest is history.
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Originally published as ‘Clown show’: Triumphant Treasurer to announce back to back $9.3 billion surplus that eluded Scott Morrison
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