Treasurer Jim Chalmers dashes hopes of third budget surplus, urges “caution and conservatism”

While the Treasurer urged “caution and conservatism” over a possible surprise surplus, he has left the door open for further cost-of-living measures.

Jim Chalmers has played down the possibility of a surprise third surplus, but flagged possible cost of living measures, as he gears up to deliver a possible pre-election budget in March.

While Labor is forecast to deliver a deficit of about $26.9bn in the 2025-26 financial year, the government could avoid handing down a budget if Anthony Albanese calls the federal election before March 25.

Speaking to reporters on Wednesday following the release of better-than-expected inflation figures, the Treasurer urged caution against speculation over a surprise hero surplus.

“I’ve seen speculation about a third surplus, and I would urge caution on that front,” he said.

“We are deliberately cautious and conservative when it comes to budgets. We were in the first three, and we will be in the fourth.”

Treasurer Jim Chalmers, at Lakewood Community managed Cooperative in Melbourne, has flagged more cost of living measures but played down a surplus. Picture: NewsWire / Nadir Kinani

He said there would likely not be much movement from the forecasted $26.9bn deficit released in December’s budget update.

“To the contrary, I know that there’s a lot of global economic uncertainty which can impact the budget bottom line in both directions, but nothing we’ve seen yet has materially changed our expectations,” he said.

However, he left the door open for further cost-of-living measures.

“What we do from budget to budget, we consider the pressures people are under, the budget constraints that we are dealing with and the economic conditions, and we come to a decision about what, if any, further cost of living help is appropriate and affordable and responsible,” he said.

“We did that in our first three budgets and we will do it in the fourth.”

Mr Chalmers also declined to say whether Labor’s $275 energy rebates would continue past July 1, 2025, saying electricity prices were moderating.

“They fell in the year to the December quarter, they fell by 25.2 per cent and they still would have fallen without the energy rebates,” he said.

“So energy rebates are part of the story but not the whole story.”

He also refrained from commenting on whether Mr Albanese would call an election before March 25, saying it was a decision for the Prime Minister.

Wednesday’s better than expected inflation figures, which reported a 3.5 per cent to 3.2 per cent drop in underlying inflation, has prompted speculation of a February rate cut, which in turn would boost Labor’s standing among voters.

“The reality is that the Prime Minister will make that decision. No doubt he’ll confer with his colleagues about it but our expectation is there will be a budget on the 25th,” he said.

Finance Minister Katy Gallagher earlier said the government would consider further relief ahead of the budget.

“We get that people have been doing it tough, feeling under pressure, which is why we have ensured that through our budget, we’ve been able to find very responsible ways of providing some relief for that,” she said.

“As we’re putting our budget together – it’s due on the 25th of March – obviously we are mindful of the economic conditions, how people are feeling out and about and whether there are any further responsible decisions we can take that can assist households as we navigate this time.”

Finance Minister Katy Gallagher says the government is considering further cost-of-living relief ahead of a scheduled March 25 budget. Picture: NewsWire/ Martin Ollman

Senator Gallagher said the government had steadily worked on the budget “over the summer” and was preparing for a March 25 release.

“We’re putting the budget together now. Really, we’ve been working on it over the summer and that will continue. It’s on the 25th of March,” she said.

Originally published as Treasurer Jim Chalmers dashes hopes of third budget surplus, urges “caution and conservatism”