TRANSCRIPT
Treasurer Jim Chalmers has announced the Mid-year Economic and Fiscal Outlook, showing a $5.4 billion improvement to this year’s deficit.
Dr Chalmers began with a tribute to those lost in the Bondi attack, announcing a $104 million contingency for security at Jewish sites and crisis services.
When the focus shifted, the Treasurer claimed a fiscal "triple crown."
He says this is the first mid-year update since the 90s to deliver a better bottom line, lower debt, and positive policy decisions all at once.
“We are strengthening the budget, we’re reducing debt, we’re delivering on our commitments... In fact, this is the only mid-year update since they began in the mid-90s to have a combination of these three features: a better bottom line each year of the forwards, less debt every year of the forwards, and net policy decisions that improve the bottom line.”
One of the few standouts in the document is a $233 million lifeline for the CSIRO, framed as a proud investment in the nation's scientific future.
However, spending pressures are shifting.
Childcare has jumped ahead of aged care in the list of the budget's biggest financial burdens, joining a "top five" of debt interest, defence, health, and the NDIS.
These are pressures that Finance Minister Katy Gallagher says are increasing, not decreasing.
“The payment variations were a big part of a lot of the work we had to deal with in finalizing MYEFO. A lot of that, obviously, are those demand driven programs, but also the increases in indexation of payments. So the age pension, for example, a big chunk in disaster relief funding because of the frequency and intensity of disasters that we're seeing. Extra money into schools veterans and we're seeing an uptake of access to childcare because of some of the changes we've made to early education and care.”
Even as the Treasurer celebrates the numbers, he says he is acutely aware of how inflation is impacting Australian households.
Since the last budget inflation has risen from 3 per cent to 3.75 per cent.
Dr Chalmers acknowledges that this threatens to outpace wage growth, potentially leading to a "real wage cut" for millions.
“So we acknowledge, obviously, even with strong wages growth, when the inflation forecast ticks up, as we have presented in these documents, then that has implications for real wages. But overwhelmingly, the story of real wages under this government has been a story of real wages growth.”
Then there is the issue of Net Overseas Migration.
While arrivals are easing, Dr Chalmers says they aren't falling as fast as Treasury hoped.
The government is also backing its housing agenda.
Dr Chalmers says they are funding the promised 100,000 homes for first-home buyers and providing $98 million to fast-track construction trades.
In response to the budget, Shadow Finance Minister James Patterson says the Labor government has missed the opportunity to stop the uptick of inflation.
He criticises the government for keeping what he calls reckless spending, saying Dr Chalmers and finance minister Katy Gallagher needs to be held responsible if interest rates rise again next year.
“The Albanese government has been warned by economists, business leaders and the Opposition that their reckless spending is driving up inflation. And now the inflation gini is well and truly out of the bottle. It's above the target band in headline, and in underlying terms, and it's forecasted to stay that way for sometime, which is why markets and so many economists are predicting inflation will rise and interets rate will have to as well.”
Mr Patterson says the Mid-Year Budget update shows the Albanese government has given up on balancing the budget in the near future.
“The Treasurer wants to claim credit today for his paltry $2 billion dollars of budget improvement over the forwards. But these improvements are in the out years, in the next two years, when inflation is above net target, his decision actually worsens the budget bottom line and put more pressure of inflation.”
In terms of next year, Dr Chalmers has signaled that the "main game" remains the May budget.
