‘Slap in the face’: Treasurer under fire over surplus amid cost of living crisis

A celebration over a larger-than-expected surplus has raised questions over whether there should be more help for struggling Aussies.

A larger than expected budget surplus has put pressure on the federal government to explain why it did not offer more support to the millions of Australians struggling with the rising cost of living.

Treasurer Jim Chalmers confirmed the surplus would be“substantially bigger” than the $4.2bn forecast in the May budget, driven by a tight jobs market and strong commodity prices, but would not put a price on the final figure.

“We deliberately took a very cautious, very conservative, very responsible, very restrained approach to the surplus,” he said.

“We’re yet to get the numbers for June … because the month isn’t finished yet.”

Treasurer Jim Chalmers confirmed the result on Wednesday. Picture: NCA NewsWire / Jeremy Piper

“But we’re very confident not just that there will be a surplus, but it will be bigger and a direct consequence of the responsible response we’ve taken to managing the budget and the economy.”

Whether it will be enough to weather any potential recession on the horizon is yet to be seen, as economic growth is forecast to stagnate in the coming years – 3.25 per cent this year before slumping to 1.5 per cent next year.

But the strong result has opened the door to questions about whether championing it while many Australians are struggling is a good look.

Sunrise host Natalie Barr called the situation a “big mess” during a panel with Labor minister Amanda Rishworth and Liberal frontbencher Jane Hume on Wednesday morning.

“People at home are just shaking their heads and thinking, I’m hearing inflation, I’m hearing cost of living crisis, and I can’t pay my bills, so, it’s a big mess,” she told the politicians.

Senator Hume accused the government of not doing enough “heavy lifting” to control spending and hand out relief to those who need it.

The bigger-than-expected surplus will help buffer the economy as inflation remains high. Picture: NCA NewsWire / Martin Ollman

Asked later by a reporter in Darwin if the stronger-than-anticipated result was a “slap in the face” for Australians, the Treasurer was quick to say the surplus made it possible to give people cost of living relief.

“Of course not, getting the budget in better condition is what makes it possible to provide billions of dollars of cost of living relief for people who desperately need (it),” Dr Chalmers said.

“I think … governments acknowledge that there‘s a lot of people doing it tough and we’ve got a responsibility to take some of the edge off these cost of living pressures where we can.

“What makes it possible, responsible and affordable is the fact that we have made room in the budget by cracking down on the rorts and waste which were a hallmark of our predecessors so we can invest and spend money where it‘s desperately needed.”

But he stressed that due to “global uncertainty” and an increase in interest payments on government debt, it was critical the nation built up a “buffer”.

An analysis by the Parliamentary Budget Office, also released on Wednesday, confirmed the improved outlook would result in a surplus for 2022-23 before returning to a deficit through the next four years.

The PBO's analysis of the budget forecasts

Interest payments on government debt remain one of the fastest-growing pressures on the budget, with the PBO forecasting it will reach its highest level since 1999-2000 over the next decade.

Of the seven fastest-growing major payments in the 2023-24 budget, all except for defence and interest payments directly relate to health and ageing.

However, the PBO analysis said the rapid growth in expenditure for the National Disability Insurance Scheme, climate change, substantial infrastructure spending pipeline and geopolitical uncertainty posed the greatest medium-term risk to the budget bottom line.

“These risks necessitate strategies that prioritise building fiscal buffers to enable governments to respond if key risks materialise,” the report said.

Originally published as ‘Slap in the face’: Treasurer under fire over surplus amid cost of living crisis