Job numbers to grow by 200,000 more than initially predicted

This year’s federal budget is expected to reveal a strong growth in real wages and a jobs boom over the next three years far in excess of what was initially forecast.

Unemployment will continue to rise for a year longer than expected before starting to fall, while real wages will start to grow earlier than predicted, next week’s budget will reveal.

Treasurer Jim Chalmers is expected to deliver Australia’s first budget surplus in 15 years on Tuesday night, aided by surging tax receipts and lower welfare payments.

In October, the government predicted unemployment would peak at 4.5 per cent at some point during the financial year beginning in July, before beginning to fall.

Instead the government now expects it will keep rising until the 2024-25 financial year, though still peak at 4.5 per cent.

On the plus side, Treasury now expects 500,000 new jobs will be created by the June quarter of 2026, around 200,000 more than was predicted in October.

Treasurer Jim Chalmers. Picture: NCA NewsWire / Martin Ollman

It is also forecasting that real wages will begin growing earlier and more strongly than previously forecast. Real wage growth occurs when the people’s pay packets grow faster than the rate of inflation.

In October, the government was expecting real wages growth would start half way through 2024, but has now brought that expectation forward to earlier in the year.

Real wages are now forecast to grow by 0.75 per cent over the year to June 2024, up from the 0.25 per cent expected last October.

Dr Chalmers said the improved outlook was the direct result of the government’s policies to get wages moving and limit energy price rises.

He said the government had overseen the strongest jobs growth for the first six months of a government on record and it was “heartening” to see that reflected in the more positive outlook for unemployment.

Real wages are now forecast to grow by 0.75 per cent over the year to June 2024

“While low national unemployment is one of our best defences against the headwinds that are intensifying in the global economy right now, Australia will not be immune from these challenges,” he said.

“We know that the unemployment rate will rise again – our task in the budget is to create as many secure, well-paid jobs as we can.”

On Friday, Mr Chalmers revealed that Tuesday’s budget papers would show the cost of servicing the interest on the commonwealth’s $1 trillion debt would be $112bn over the next four years.

“This is the hefty price that Australians are being asked to pay for the Liberals’ failures to manage the budget responsibly,” he said.

“These are the characters that left a trillion dollars in Liberal debt with not enough to show for it.”

He said the budget would lay foundations for a stronger, more secure and resilient economy by investing in energy transformation, skills and national security, and showing restraint to make finances more sustainable.