Federal Treasury uncovers unexpected $6bn bill before budget

Ahead of next month’s budget, the federal government has released details of $6.1bn in unfunded spending — and it warns there is more to come.

Treasury has found more than $6bn in unfunded cost overruns ahead of next month’s budget – and the government has warned there is more to come.

Days after Treasurer Jim Chalmers announced and Finance Minister Katy Gallagher revealed the forecast deficit for last financial year would be $50bn lower than was predicted in April, the government has released details of $6.1bn in unfunded spending it has inherited.

The biggest item is $2.6bn in delayed payments for road and rail projects due to delays in milestone payments due to contractors.

This was closely followed by $2bn to rebuild damage caused by this year’s flooding and delayed payments to flood-affected individuals.

The government also owes $800m in delayed payments for RATs and PPE to aged care facilities and $400m owed to businesses impacted by Covid-19 lockdowns, funding for which will be available in future years to fulfil claims.

Treasurer Jim Chalmers. Picture: AAP

Grants worth $300m are due to paid in delayed modern manufacturing grants

Finance Minister Katy Gallagher has warned the government had “just scratched the surface” and other programs right across the public service only funded in the short-term would need to be continued.

“The October Budget will have to find room for all of these pressures, adding to the magnitude of the problem we face over the next five weeks,” she said.

She said the government was working to identify the challenges inherited from the former government.

“But the reality is, the trillion dollars of debt left behind by the Coalition will continue to have an impact on the Budget for some time,” she said.

“From the Coalition’s bungled and protracted vaccine roll out, to labour shortages and supply chain pressures that we’re still experiencing now – these have all led spending to be delayed with serious impacts now and into the future.”

Finance Minister Katy Gallagher warns the government has ‘just scratched the surface’. Picture: Martin Ollman

Treasurer Jim Chalmers said there was no quick fix to the budget and it will take more than one budget mess Labor had been left with by the previous government.

“Billions of dollars that were promised by our predecessors were not delivered in time, and are adding to our substantial budget pressures this year and beyond,” he said.

“Australians continue to pay the price for the Liberals’ fiscal recklessness, through cost blowouts and delays, underfunded essentials and the growing interest costs on the trillion dollars of debt that they left us.”

On Tuesday the government revealed last financial year’s deficit would be $79.8bn.

The improvement on the April forecast was due to $28bn in increased revenue, largely from commodities and $20bn in lower spending due to falling welfare and Covid-19 payments.