Markets 
Treasurer Jim Chalmers will reveal a $6 billion budget boost on Monday as he faces internal pressure to curb inflation ahead of the Reserve Bank’s likely decision to raise interest rates to a 15-year-high.
The final budget figures are expected to show that the underlying deficit is about $6 billion lower than the $28.3 billion initially forecast at the time of the budget in May.
The government did not explain how the better result had come about and whether the revenue had come from the continued strength of the jobs market or commodity prices mostly outside the government’s control.
“Responsible economic management is a defining feature of this Albanese Labor government, and you will see that in the final budget outcome,” Chalmers said ahead of the full release of figures.
Labor’s two budget surpluses last term, which have given way to forecasts of a decade of deficits, were generated by what leading budget analyst Chris Richardson has called a commodity-driven $400 billion “revenue rainbow” that represented “a level of luck never before seen in Australia”.
The headline deficit, where the government can place big-spending items, is projected to be around $60 billion this year. Last week’s Intergenerational Report indicated that debt and taxes would keep rising over the next four decades if Australia’s productivity malaise continued.
The Reserve Bank is widely expected to make its fourth hike of the year on Tuesday, raising the cash rate to 4.6 per cent to address sticky inflation. Markets are pricing in another hike early next year, bringing more pain to households that have experienced a series of economic setbacks since the global financial crisis.
Deputy Prime Minister Richard Marles said the US’s war with Iran had raised petrol prices and pushed up the cost of production.
“We’re also now seeing it in terms of global inflation and that’s being experienced in advanced economies around the world. Most advanced economies have experienced a rate rise in the last month,” he said on News24’s Sunday Agenda.
This masthead reported this month that a growing minority of Labor MPs were becoming uneasy about the government’s agenda to raise productivity and counter inflation.
Opposition frontbencher James Paterson accused Labor of using global events to shirk responsibility.
“The Reserve Bank governor … has been clear: this is being driven primarily by domestic factors,” he said.
“The only thing the government really can control on its own is the amount of money they spend. The RBA and other economists have been clear, the government is spending at stimulus levels, and that is driving up inflation and forcing the RBA’s hand.”
Opposition Leader Angus Taylor said last week that Labor had an $83 billion black hole in its budget, but Chalmers has said the Coalition has made a series of unfunded announcements.
Chalmers revealed last week that the government would be forced to pay billions more in interest payments on its $1 trillion debt due to the spike in global bond yields.
Yields on bonds have surged due to fears about the sustainability of government budgets in the US and Europe, the war in the Middle East and the voracious money-raising efforts of AI firms which are competing with governments for money to fund the race for general artificial intelligence.
The Australian Financial Review reported on Saturday that the government would soon spend more on interest repayments than on Medicare.
Paul Sakkal is Chief Political Correspondent. He previously covered Victorian politics and won a Walkley award and the 2025 Press Gallery Journalist of the Year. Contact him securely on Signal @paulsakkal.14.Connect via X or email.From our partners
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