Glaring problem with Budget surplus

As the Greens accuse Labor of designing the budget surplus for “political reasons”, the Coalition say the only reason the budget has improved so significantly is because of them.

Tuesday’s budget will forecast a $4 billion surplus forecasted for the financial year – the first surplus since 2007/08, before returning to deficit for the next four years.

Dr Chalmers said while there is a projected $143 billion improvement over the four years to 2025-26, it was better to be cautious than to celebrate.

Greens treasury spokesman Nick McKim said the government shouldn’t be boasting about being back in black.

“This surplus has been designed for political reasons, by Jim Chalmers,” he told ABC Radio.

“And again, what we are seeing in this budget is an acknowledgment rhetorically that the government needs to do more to help people who are doing it really tough, but they are not taking the action they need to actually deliver help at the extent that it is desperately needed.”

Shadow treasurer Angus Taylor said rather than focusing on a short-lived surplus, the government needed to ensure its budget didn’t add to inflationary pressures.

“As soon as the pandemic was done and the economies of NSW and Victoria opened up in late 2021, the budget was in balance – right through to (our last) budget,” Mr Taylor said.

He said Labor had inherited an “incredibly strong position base”, as well as a strong job market and a strong commodity sector.

“A drover’s dog could deliver a surplus with the record revenue being served up to Labor as part of this budget,” he said.

Dr Chalmers said the budget position “would not be possible if we copied the approach of our predecessors”.

“Or if we hadn’t imposed on the budget the sort of discipline that makes it possible for us from that stronger foundation to look after people in the here and now, at the same time as we invest in their future,” he said.

But Mr Taylor said a strong economic recovery post-Covid was “always the plan”

“It was truly a ‘V’ shaped recovery, that was always the plan. Now the challenge is this, this is the test for Labor – to deal with these inflationary pressures,” he said.

“By making sure that spending grows slower than the economy and that there’s balanced budgets over the medium term, not just the short term, and those inflationary pressures are dealt with now.”

Canavan’s coal message

Meanwhile, Nationals senator Matt Canavan has hit out at the government’s treatment of the resources sector in the budget, bringing a lump of coal along to his morning media appearances to drive home his message.

“This is your surplus,” he said holding the piece of coal in a stunt reminiscent of then-treasurer Scott Morrison.

“This is the only reason he is getting a surplus.”

When asked about whether coal was the reason for the surplus, Mr Chalmers said “of course not”.

“Obviously the resources sector is making an important contribution to the budget, but it’s not the biggest contribution,” he said.

“About a fifth of the upward revision to revenue comes from higher commodity prices.

“Twice that comes from a much stronger labour market and the fact that after a decade of wage stagnation, we’re seeing the welcome beginnings of wages growth and that’s made a much bigger contribution to the improvement.”