Treasurer Jim Chalmers could unveil shock budget surplus

While remaining coy about what exactly the budget will contain this week, there is speculation Jim Chalmers might be making a shock announcement.

Treasurer Jim Chalmers is tipped to unveil a shock surplus but the back in black budget will be short-lived.

As he puts the final touches on Tuesday’s budget, the Treasurer has refused to rule out a wildcard surplus in the 2023 budget.

Sky News political editor Andrew Clennell reported on Thursday that surging tax revenue from higher iron ore, coal and gas, and low unemployment was likely to deliver the shock result.

But the Treasurer has remained coy this week when asked about strong speculation he was set to deliver the first surplus in 15 years.

“Certainly there’ll be a substantial improvement this year because of a few things, not just commodity prices, but also lower unemployment and stronger wages growth,’’ he told ABC radio on Tuesday.

“But the numbers are still bouncing around a bit. There are still a couple of decisions to finalise and we don’t print the Budget until the weekend so it’s a bit premature.”

Treasurer Jim Chalmers. Picture: Martin Ollman/NCA NewsWire

But he cautioned that the budget will return to deficit as a result of a number of factors.

“The other thing is even with this quite substantial near-term improvement in the Budget, the pressures on the Budget in the third and fourth and subsequent years are actually intensifying rather than easing. We’ve got a structural challenge in the Budget, which isn’t dealt with by this temporary improvement,’’ he said.

Pressed repeatedly on whether or not a surplus was a real possibility, he claimed earlier in the week that it was too soon to say.

“I think it’s premature still because, as I said before, there’s still a bit to finalise. We’ve got a week to go until the Budget. It doesn’t get printed as I said until the weekend,’’ he said.

“But it’s possible, right?,’’ he was asked by ABC Radio’s Patricia Karvelas.

“Well, it’s sort of premature because there’s a couple of things still to be determined,’’ he said.

“But your broader point about whether or not there’s an improvement, there is – in the near term – a substantial improvement, but then a deterioration after that. And it is partly because of the prices that we’re getting for our exports, but also we are over-performing when it comes to the unemployment rate and when it comes to the beginnings of wages growth, which is very welcome, and that feeds into a better bottom line in the near term as well.”

Prime Minister Anthony Albanese. Picture: Andrew Parsons/The Australian

Last month, the Treasurer warned of “incredibly weak” economic growth over the next five years.

Mr Chalmers said the May budget would have three key priorities — cost-of-living relief, growing the economy and ensuring Australia is “more resilient to international shocks”.

“This budget will be handed down in the context of an uncertain and volatile global economy which is precariously placed,” he said after a short visit to Washington DC where he met with global financial leaders.

“The best antidote to global economic uncertainty is responsible economic management here at home and that’s what the May budget will represent. Low unemployment, high prices for our exports … both of those things are helping the budget right now, but the pressures on the budget are intensifying after that.”

It comes after the latest figures from the Department of Finance showed the federal budget eked out a “wafer thin” surplus of $1.034 billion in the 12 months to March.

Economist Chris Richardson said that represented a “stunningly strong” turnaround in the underlying cash balance of $204 billion in 25 months, with rising terms of trade and inflation the two big drivers.