Jim Chalmers rolling in revenue while borrowers roil

Jim Chalmers is on track to record a second successive budget surplus. Picture: NCA NewsWire/ Linda Higginson

Families with mortgages are under the pump, while Jim Chalmers is swimming in tax dollars.

On Friday, the Reserve Bank’s reading on the state of household balance sheets moved into the shadow of the statement of Canberra’s finances for the first two months of this financial year.

Look away, it’s a fiscal eclipse.

The federal budget remains in rude health, coming off a $22bn cash surplus in the previous financial year.

According to figures from the Department of Finance, personal income tax in July and August was $3.3bn higher than expected.

Budget tragic Chris Richardson says another surplus is likely this year, rather than the $13.9bn underlying cash deficit estimated in the May budget.

The 12-month rolling surplus has jumped to $26.7bn.

Strong employment, wage inflation and the magic of bracket creep, as well as the resilience of record-high export prices, are keeping the Treasurer’s budget in the black.

After chairing her first RBA board meeting this week, Michele Bullock observed that many families are “experiencing a painful squeeze on their finances” from the central bank’s brutal monetary assault.

Others, she went on, are “benefiting from rising housing prices, substantial savings buffers and higher interest income”.

The RBA’s latest stability review tells us the financial solar system, too, is in relatively good shape but mortgaged Earthlings are drawing down on their pandemic-era savings to meet rising living costs.

Almost one-in-five fixed-rate borrowers will have their incomes falling below the cost of their repayments and living expenses (including private health and school fees) when their cheap-price loans roll over.

As higher mortgage rates and rents bite, with elevated fuel, energy and insurance costs in the mix, the Albanese government will come under intense pressure to provide further cost relief to families.

Chalmers insists the government is “rolling out billions of dollars of cost-of-living relief in a way that doesn’t add to inflationary pressures”.

It’s a delicate balance: in theory, the fiscal turnaround over the past three budgets points to very restrictive policy.

But with the revenue rolling in, and a progressively unloved government halfway through a parliamentary cycle, Labor’s caucus and more spendthrift ministers will be putting the squeeze on the custodian.