Extraordinary Commodity Price Assistance Budget
Treasurer Jim Chalmers says the sharp improvement in the budget is partly a reflection of the “quite extraordinary” prices Australia is getting for its commodities.
The monthly financial statement released by the Department of Finance on Friday shows the underlying budget deficit was $33.4 billion in May, compared to $60.5 billion that was expected after 11 months of fiscal 2021/ 22.
A $79.8 billion deficit was projected for the full year in the March budget.
“Obviously, we want those numbers to come in strongly,” Dr. Chalmers told the ABC’s Insiders program on Sunday.
“But what they don’t take into account is the volatility of the prices of our raw materials. I think iron ore is down 12% in the last week, and that has implications for the budget. »
In a tweet, Shadow Treasurer Angus Taylor boasted that the strong budget result was due to the coalition government’s strong economic management.
“Interesting that the Labor Party is trying to quietly release these numbers late on a Friday afternoon,” he tweeted.
The monthly statement is usually released on a Friday afternoon.
Dr Chalmers said a range of issues ran counter to the budget, including interest rate payments on the trillions of dollars of debt Labor inherited.
“As interest rates rise, the cost of servicing debt also rises. So that’s another pressure on the budget,” he said.
“The budget is in a fairly large structural deficit, considering the laudable and justified spending that is in the budget, and rising borrowing costs are one of those additional pressures.”
Dr. Chalmers will release his first budget in October.
Opposition Leader Peter Dutton told News Corp Australia he wanted the Federal Government to double the amount pensioners could earn without cutting pension payments to $600 a fortnight.
It would aim to alleviate the chronic labor shortages seen across the economy.
Dr Chalmers said both sides of parliament were looking at this ahead of the election as there was a need to build a larger pool of available workers.
“I’ve had some good productive conversations with national seniors and others about whether or not we can do something here,” he said.
“Even an idea like this, which seems relatively modest, still has a relatively high price tag.”
This is an issue that will be discussed at the government’s employment summit in September, which will bring together businesses and unions.
Dr Chalmers will also deliver an economic update in a ministerial statement when Parliament returns in July, which will include the government’s forecast for inflation.
“What this will show is that inflation will get worse before it gets better,” he said.
“That’s the general expectation now, and so it’s a difficult situation that we have to deal with before inflation hopefully moderates over the next year.”