The Australian federal budget improved considerably in May due to the extraordinarily high prices of the country’s commodities.
In the latest monthly financial statement released by the Department of Finance, the underlying budget deficit reached $33.4 billion (US$23.11 billion) in the month, much lower than the $60.5 billion previously predicted in the 2021-2022 Revised Budget.
“Obviously, we want those numbers to come in strongly,” Treasurer Jim Chalmers told the ABC’s Insiders program.
“But what they don’t take into account is the volatility in our commodity prices. I think iron ore dropped 12 per cent last week, and that has implications for the budget.”
Speaking about the new figures, Shadow Treasurer Angus Taylor remarked that the robust budget performance was the result of the previous Coalition government’s solid economic management.
” Our record is very clear. We left the economy with strong GDP growth, historically low-interest rates, record low unemployment, and the largest turnaround to the budget bottom line in 70 years,” he said on a Twitter post.
Our record is very clear. We left the economy with strong GDP growth, historically low interest rates, record low unemployment, and the largest turn around to the budget bottom line in 70 years.
— Angus Taylor MP (@AngusTaylorMP) June 24, 2022
Nevertheless, the treasurer said the budget was suffering from a range of issues, including the interest rate payments on the government’s debts.
“As interest rates go higher and higher, the cost of servicing that debt goes up as well. So that’s another pressure on the budget,” Chalmers said.
“The budget is in a pretty big structural deficit, when you consider the worthy and warranted spending that’s in the budget, and increased borrowing costs is one of those additional pressures.”
Opposition Calls for Doubling Earning Threshold For Pensioners
In a related development, Opposition Leader Peter Dutton was pushing for a rise in the earnings threshold for Australian pensioners.
Current, pensioners are only allowed to earn around $300 a fortnight if they want to maintain their government allowance, and the Opposition has proposed to double this amount.
“Employers can’t find staff–thousands of jobs across hospitality, agriculture, tourism and retail remain open,” he said in a statement.
“This policy ensures that pensioners and veterans, who want to work, are not financially penalised. It puts more money into their pocket.
In response, Chalmers said the issue had been on the parliament’s table before the federal election took place as there was a need to increase the number of available workers in Australia.
“I’ve had good, productive conversations with National Seniors and others about whether or not we can do something here,” he said.
“Even an idea like this, which appears to be relatively modest, still comes with a relatively hefty price tag.”
Meanwhile, the treasurer is expected to provide a ministerial statement detailing economic updates, including government forecasts for inflation, when the parliament resumes in July.
“What that will show is that inflation will get worse before it gets better,” he said.
“That’s the expectation across the board now, and so that’s a difficult situation that we need to deal with before inflation hopefully moderates throughout the course of next year.”