‘Lucky Jim’ set to hand down surplus

Treasurer Jim Chalmers is set to deliver the first surplus in over a decade in a stunning budget turnaround that even he admits won’t last.

The Queenslander is set to pull off an astonishing fiscal turnaround that will deliver a modest $4 billion surplus.

It’s the first time the budget has been back in black for 15 years.

On Tuesday, the Albanese Government will argue that its own decisions “have seen the Budget improve by more than $143 billion over four years to 2025-26.”

But in truth, it’s largely off the back of better than expected employment figures which have boosted tax revenues and commodities prices.

But the budget will be back in the red in the years after that, albeit with smaller deficits over each year of the forward estimates compared to previous forecasts.

“The improvements you’ll see in the Budget are a direct and deliberate result of the Albanese Government’s approach to substantial near-term boosts to revenue,’’ the Treasurer said.

“Our responsible economic management is all about spending restraint, substantial savings redirected to other priorities, and modest but meaningful tax changes.

“What’s absolutely clear is that this outcome would never have been possible without our decision to return most of the upward revisions to revenue to the bottom line.”

Despite the festive mugs that former Treasurer Josh Frydenberg produced in 2019 promising a return to the surplus, it never delivered.

Scott Morrison, who is tipped to resign from parliament soon, later conceded while interviewed on the ABC’s 7.30, the budget was not actually in surplus at that time.

The Treasurer Jim Chalmers said debt remained a real challenge.

“Debt and deficits would be bigger and the inflation challenge even more serious if we’d followed the path taken by our predecessors,’’ he said.

“Despite the substantial progress we’ve made, it will take more than one budget or one term to clean up the mess we inherited.

“Given the challenges we face, the Albanese Government’s responsible economic management is more important than ever.

“We are putting the Budget on a much more sustainable footing at the same time as we provide cost of living relief and invest in the future.”

Here’s what we know about the 2023 budget so far:

Cost of living

The Treasurer has promised a $14.6bn cost of living package over four years to help Australians struggling with mounting pressures, while also not adding to inflationary pressures.

Part of that includes a $1.5 billion electricity package, which will provide up to $500 in power bill relief to more than five million households and one million businesses.

A repackaging of a promise made following an emergency parliamentary sitting in December, how much a person receives will depend on where they live given the government had to make individual agreements with each state and territory.

Expect the budget to boast that the government’s decision to intervene in the gas market will also ease gas price rises to just 18 per cent and 4 per cent over the coming two years (instead of 20 per cent in each).

There will also be an electrification package for low-income households and renters designed to boost energy efficiency and insulate households from future price shock in the energy market.

Welfare

Single parents who rely on welfare will not be forced back to work until their youngest child is 14 in a move that will deliver a $4,576 a year windfall to eligible families.

Prime Minister Anthony Albanese, who has long maintained the decision of the Gillard Government to make single mums go back to work when their youngest child was eight was a mistake, is announcing the change today.

The decision overturns one of Julia Gillard’s most controversial policies by allowing single parents to stay at home for four more years without being moved to Jobseeker.

The changes will overwhelmingly impact single mothers, some of whom were affected by family violence.

Eligible single parents currently on Jobseeker as a result of the changes are also winners under the changes and will secure an increase to payments of $176.90 per fortnight.

Smokes, vapes

Health Minister Mark Butler announced the budget would include $234mn to fund the new measures.

In a bid to curb smoking more broadly, the government has announced taxes on cigarettes will be raised by 5 per cent, totalling a $3.3bn increase in revenue over the next three years to help pay for health programs.

At the pharmacy, up to six million Australians will be allowed to buy double their medication for the price of a single script as part of a shake-up to the Pharmaceutical Benefits Scheme.

Long Covid research will also benefit from the budget, with the government announcing a $50m investment into the Medical Research Future Fund.

And, the Medicare rebate will be extended for heart health assessments until June 30, 2025, in order to target the country’s “biggest killer”: heart disease.

Homebuyers

Family and friends wanting to buy a house together will be able to under an overhaul to the first-home guarantee and its regional counterpart.

The expansion of the scheme will allow thousands more Australians to access the government’s guarantee – which means they can purchase a home with as little as a 5 per cent deposit, with the government to assure the remaining 15 per cent.

Oil and gas

Big oil and gas producers will have their tax deductions capped and face tougher tax compliance measures as part of a budget crackdown estimated by Treasury to raise $2.4bn over four years.

The biggest revenue raiser out of the 16 technical petroleum resources rental tax (PRRT) changes will be limiting annual deductions for expenditure at 90 per cent of the project’s income each year from July 2023.