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<\/p>\nThe federal budget\u2019s bottom line has come in better than expected, but some economists warn Australia is not out of the woods yet. <\/p>\n
The final budget figures for 2025-26 released on Monday showed the underlying deficit is about $6 billion smaller than the $28.3 billion forecast when the budget was handed down in May. <\/p>\n
<\/p>\n
Treasurer Jim Chalmers has revealed a $6 billion budget boost.\u00a0Alex Ellinghausen<\/p>\n
Treasurer Jim Chalmers and Finance Minister Katy Gallagher attributed this to a $1.4 billion cut in government spending from aged care, the PBS, childcare and national partnership payments and $4.6 billion more receipts from tax on higher superannuation and investor income.<\/p>\n
\u201cDespite this very welcome improvement in the budget, we know that pressures are intensifying rather than easing,\u201d Chalmers said. <\/p>\n
\u201cResponsible economic management is a defining feature of this government. <\/p>\n
\u201cYou can see that in the final budget outcome, and we\u2019ll see that in the difficult months ahead as well.\u201d<\/p>\n
Chalmers, who is facing pressure to help curb above-target inflation cent and bring down public spending, hit back at suggestions the government was making life harder for Australians. <\/p>\n
\u201cOur inflation challenge is partly domestic, but it is made much worse by global conditions,\u201d he said.<\/p>\n
\u201cAnd from an economic point of view, the war in the Middle East has been absolutely disastrous for family budgets in Australia.\u201d<\/p>\n
The treasurer said households would be anxiously awaiting the Reserve Bank of Australia\u2019s interest rate decision on Tuesday, when the central bank is likely to hand down a 25-basis-point hike to bring rates to a15-year high of 4.60 per cent.<\/p>\n
\u201cAny increase in interest rates obviously puts additional pressure on people,\u201d he said. <\/p>\n
AMP chief economist Shane Oliver said Monday\u2019s figures are unlikely to deter the board from further tightening as inflation remains too high. <\/p>\n
\u201cI think the RBA and the money markets already knew that the deficit was running better than expected, reflecting a continuing surge in taxes, particularly on the back of higher than expected commodity prices and employment, and therefore it\u2019s not really a surprise,\u201d he told nine.com.au.<\/p>\n
Oliver said government spending was still one of the main factors impacting persistently high inflation, alongside high public and private demand and state infrastructure projects. <\/p>\n
\u201cThe basic problem the RBA had was the demand was just too strong in the economy, and government spending was part of that,\u201d he said. <\/p>\n
New research from the e61 Institute found the federal budget made no explicit allowance for the routine major economic shocks that have hit the country since 2008 \u2013 a deep recession, a global bond market breakdown and a geopolitical crisis in the Asia-Pacific. <\/p>\n
It found that each risk carries an expected cost of about 0.8 per cent of GDP a year over the long term. <\/p>\n
\u201cDebt never got back to its pre-GFC level before COVID hit, so we went into the pandemic from a much higher base,\u201d e61 senior research economist Aaron Wong said. <\/p>\n
\u201cIf that pattern repeats, each crisis leaves us less able to handle the next one.\u201d<\/p>\n
Wong said the federal government is the only insurer big enough to spread the cost of a hit on the economy.<\/p>\n
\u201cBut an insurer that never rebuilds its reserves between claims eventually runs out of room,\u201d he said. <\/p>\n","protected":false},"excerpt":{"rendered":"The federal budget\u2019s bottom line has come in better than expected, but some economists warn Australia is not…\n","protected":false},"author":2,"featured_media":908598,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99],"class_list":["post-908597","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/908597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=908597"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/908597\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/908598"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=908597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=908597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=908597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}