The Albanese Labor government claims to have delivered “the biggest back-to-back surpluses on record,” with an underlying cash surplus of $15.8 billion (0.6 percent of GDP) for the nation.
It follows the $22.1 billion (0.9 percent of GDP) surplus in 2022-23.
In a statement released on Sept. 30, the government says this is the largest nominal improvement in the budget position during a Parliamentary term.
“Our back-to-back surpluses are helping in the fight against inflation, and that’s been acknowledged by the RBA governor,” the statement said.
In June, Reserve Bank Governor Michele Bullock said, “I think fiscal policy has been running a surplus for the last couple of years, so I’d say that has been helping.”
The surplus is estimated to have been generated largely due to major changes to try to rein in the cost of the Labor-created National Disability Insurance Scheme (NDIS), as well as aged care policies.
The government has said it aims to save $14 billion (US$9.7 billion) from NDIS costs over the next four years. Labor warns that without intervention, the NDIS’s annual growth rate of 13.8 percent would make the program financially unsustainable in the near future.
Similarly, aged care spending is projected to double over 40 years, but government reforms aim to slow this growth.
The changes include $930 million in spending over four years and $12.6 billion in savings over 11 years. By 2034-35, aged care’s GDP share will moderate from 1.5 percent to 1.4 percent, with improved care.
A joint statement released by Treasurer Jim Chalmers and Finance Minister Katy Gallagher adds that the budget position has improved by $172.3 billion across the past two years, compared to what they inherited from the previous government.
“The stronger budget position means gross debt is $149.1 billion lower in 2023–24 than what was forecast at the election, which means we avoid around $80 billion in interest costs over the decade,” they said.
Earlier today, Chalmers spoke to ABC Radio, saying the key to these two surpluses is that “when we’ve had upward revisions to revenue because the labour market’s been stronger, or our exports have performed well, we’ve banked almost all of those.”
He added that without government spending restraint, the surpluses would not have been possible.
However, recent GDP figures show that government spending has increased by 1.4 percent. Katherine Keenan, head of national accounts at the Australian Bureau of Statistics (ABS), stated on Sept. 4 that state and local expenditure had contributed to growth, driven by a rise in employee expenses.
Meanwhile, Chalmers maintained that while higher commodity prices had helped, they were not the only reason behind the surplus.
“The improvement from our expectations of the surplus in May to the final budget outcome that we’re reporting today is not about more revenue, higher commodity prices, or more taxes—it’s about less spending,” he said. “We always take a deliberately conservative approach to commodity prices, and that’s been warranted.”
The Opposition called Chalmers’ claims superficial.
Shadow Finance Minister Jane Hume accused him of failing to address the structural deficit.
“The hard work, the hard decisions, haven’t been made by Jim Chalmers,” Hume told Sky News Australia.
“He hasn’t scratched the surface of the structural budget deficit we are facing. We’re looking at a much higher deficit in the next financial year, and higher still after that. This demonstrates that the hard work hasn’t been done to improve the structural bottom line.”
Tasmanian Senator Jacqui Lambie also criticised the government, stating, “Nobody gives a stuff about a surplus.”
Referring to recent inflation and GDP data, she said, “I can assure you right now, people are doing it hard out there.”
