Tuesday’s budget is set to reveal that more than $17 billion in savings will be diverted in order to fund a suite of higher-priority measures.
While the Treasurer has remained tight lipped over whether he’ll hand down the first surplus budget since Kevin Rudd was Prime Minister, new detail has emerged about the state of the nation’s coffers.
The $17.8 billion in “savings and reprioritisations” follows the $22 billion figure announced in the October budget. The culmination will allow Labor to fund what it deems higher-quality investments and priorities.
Of the savings in this budget, $7.8bn alone is within the Defence department, with the money to be reinvested as part of the government’s response to the Defence Strategic Review.
Further savings and reprioritisations have been identified right across government agencies, and will be detailed on Tuesday.
Treasurer Jim Chalmers and Finance Minister Katy Gallagher have in the year since winning office reiterated the “difficulty” in repairing the budget, after inheriting significant structural deficit and more than $1 trillion in debt.
They’ve warned that even if there is a surplus in the short term, the medium-term will still be plagued by significant strain.
Senator Gallagher said the figures were proof the government was committed to making the budget more sustainable.
“Our approach to strong budget management is in stark contrast to the tricky budgeting tactics and dishonesty from the former government,” she said.
“Labor is being upfront with the Australian people about the true state of the books and about the decisions we are making to support those in need and grow our economy.”
“The $17.8 billion is in addition to the $22 billion of savings and reprioritisations that we found in the October budget and demonstrates Labor’s commitment to the ongoing task of managing the budget responsibly and in the interests of all Australians.”
While Dr Chalmers would on Sunday not reveal whether the budget would be briefly back in black, he said the “substantial improvement’ in the near-term budget bottom line was driven mostly by a strong jobs market.
It’s understood about 40 per cent of the revenue upgrade is because of significant employment growth and a pick-up in wages growth; while 20 per cent is attributable to higher commodity prices.
The remaining 40 per cent is a result of greater revenue from other sources.
Dr Chalmers said more broadly the government’s “responsible approach” to its first two budgets had made a significant difference.
“My focus really is to try and get the budget in as good a nick as we can,” he told Sky News.
“There will be substantial improvement in the near term, but it gets difficult after that as the pressures intensify, rather than appease.”