Budget’s $200bn, two-year windfall

Treasurer Jim Chalmers has ridden an extraordinary, unprecedented and also totally unpredicted $200bn two-year revenue surge.

Federal Treasurer Jim Chalmers has been exceptionally fortunate. Picture: David Beach

Treasurer Jim Chalmers has ridden an extraordinary, unprecedented and also totally unpredicted $200bn two-year revenue surge.

He is indisputably the luckiest “fiscal fiend” in our history, riding a tidal wave of tax revenues from our surging migration-driven population growth and the world’s insatiable demand for our exports of iron ore, coal and gas.

Exports – and massive tax revenues – which his cabinet colleague, the minister for destroying our energy system, Chris Bowen, is currently in Dubai throwing a hissy fit over, demanding – demanding – the world stops buying from us.

Is that some definition of a unique cocktail of insanity and bottomless stupidity, or isn’t it?

Our entire economy, our entire standard of living and indeed our basic survival as a country, rides on our resources exports: and we have a man masquerading as a minister of the Crown demanding on behalf of the entire government that the world sets a date to terminate our existence? Back in March 2022, then-treasurer Josh Frydenberg (remember him, he used to be the “next Liberal prime minister”?) predicted in his last budget that revenues over the two years 2022-23 and 2023-24 would add to $1133bn.

Now his successor Chalmers (is he currently, the “next Labor prime minister”?) is predicting they will add to $1335bn: a stunning $202bn or 18 per cent bigger figure. The first half of it all, for the 2022-23 year, is already banked and having produced that $22bn 2022-23 budget surplus.

With Chalmers and his estimable assistant, Finance Minister Katy Gallagher, having to do little other than count the cash flowing in and limiting the sticky ministerial fingers grabbing at it. I’ll give the duo some credit.

The increased spend over the two years “only” went up $46bn, from Frydenberg’s projected $1268bn to Chalmers’ now-projected $1314bn. So we got an extraordinary, unprecedented, $155bn boost to the two-year budget bottom line. Frydenberg – and Treasury – had in March 2022 projected the two-year deficit would add to $134bn. Chalmers now says it will add to a $21bn surplus.

So where did all this money come from? Chalmers is projecting an extra $72bn from personal tax over the two years. Yes, we came out of Covid much stronger and quicker – and with higher inflation, and bigger wages growth and so higher personal tax payments – than anticipated. But the biggest driver was that massive surge in immigration, adding over one million people to the taxpaying workforce through the three years to June 2024.

Even so, the personal tax surge was swamped by an extraordinary $110bn leap in company tax payments for the two years. Frydenberg had projected $178bn, Chalmers now expects $288bn.

Yes, more jobs and profits in the “normal” economy contributed. But the overwhelming part of the increase came from the resources sector: iron ore, coal and gas. Including of course, gas sold to long-suffering Aussie consumers – at global prices. Oh yes, I did note the 2022 forecasts were really “Treasury forecasts” – from a Treasury utterly unable to read the economy. So note, soberly, the latest ones are of course, also Treasury’s.

Originally published as Budget’s $200bn, two-year windfall