More than $400 million of that $2 billion will now be “reinvested” into low- and zero-emissions technology in a sign that industry interest in hydrogen is waning. Extra savings will be revealed on Wednesday.
Gallagher said that since coming to office, the government had made $114 billion worth of budget savings.
“Delivering savings isn’t just good fiscal management – it’s about guaranteeing that the services our communities depend on remain strong and sustainable, while also dealing with the significant spending pressures we are facing,” she said.
The government will have to reveal an increase in taxation revenue, for which monthly budget figures are already showing extra cash flowing from working people.
To the end of October, the budget bottom line was $6.6 billion ahead of what had been expected in March.
Shoppers have continued to spend, helping to maintain tax revenues for the federal government.Credit: Louie Douvis
Most of the improvement is due to income tax, which was almost $4 billion stronger through the first four months of the 2025-26 financial year. Taxes on superannuation funds were $3.1 billion better than had been forecast.
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The budget is predicated on a series of key assumptions, including inflation and the price for key commodities.
Iron ore, the nation’s single largest export, was forecast to fall from around $US100 a tonne to $US60 a tonne by March. It is currently $US106 a tonne.
An unexpected spike in gold prices, which have climbed 64 per cent this year, is also contributing to stronger tax revenue out of the sector.
The Australian dollar is stronger against the US dollar than had been expected, due in part to the turmoil in the Trump administration’s economic policy.
Jobs growth, while easing, is still above the rate forecast in March, while wages growth has remained solid at 3.4 per cent in the 12 months to the end of September.
There are also signs that consumer spending is lifting, which would boost overall GST collections. Data collected by the Commonwealth Bank last week revealed a spike in expenditure on recreation due in part to big-name concerts by artists such as AC/DC and Oasis.
Chalmers would not be drawn by how much the budget bottom line would improve or deteriorate in this week’s update, saying the “main job has been to not go substantially backwards”.
On top of the forecast $42.1 billion deficit this year, the March budget forecast deficits of $35.7 billion, $37.2 billion and $36.9 billion over the next three years.
Last week, the government confirmed it would not continue with its energy subsidy program despite evidence it is popular with voters.
The treasurer, who described the decision on the energy subsidy as a difficult but correct one, said the update would confirm the shift in the government’s efforts to ease cost of living pressures.
“Our commitment to helping with the cost of living has not changed even as the nature of that cost of living help has evolved over time,” he told Sky News on Sunday.
“[It’s] a big shift from temporary help to permanent help delivered via the tax system, via bulk-billing, cheaper medicines, cuts to student debt and all the different ways that we are helping with the cost of living.”