What to do with a surplus? Pay down some debt

Treasurer Jim Chalmers will use the federal budget’s first surplus in 15 years to pay down government debt rather than sock it away in the Future Fund.

In his budget this week, Chalmers forecast a surplus of $4.2 billion for 2022-23. If delivered, it would be the first surplus since 2007-08.

In the 15 years since that $19.8 billion surplus, the Rudd, Gillard, Abbott, Turnbull and Morrison governments recorded cumulative deficits of $612.7 billion. Over that same period, gross government debt has climbed from $55.4 billion to $897 billion.

Chalmers said the budget would not have got close to a surplus if not for banking 82 per cent of the upward revisions in revenue and finding $17.8 billion of savings and spending that could be reprioritised.

“We inherited a trillion dollars of Liberal debt, and structural problems in the budget that persist,” he told this masthead.

“The modest surplus that this budget forecasts will help to address the debt left behind by our predecessors and will help to ease the cost of servicing the debt, which has become one of the fastest-growing costs on the budget.”

When created, then-treasurer Peter Costello said the Future Fund would be used to cover the outstanding superannuation costs of the nation’s federal public service. An initial $18 billion, saved from past budget surpluses and asset sales, was injected into the fund.

“The government will also contribute future realised surpluses and proceeds from asset sales to the fund,” he said at the time.