Monthly figures released by the government show that the Federal Budget is in surplus by much more than expected. So, will the Treasury use any of that cash to ease cost-of-living pressures for Australians?
The short answer, unfortunately, is no. This is despite the fact that the budget is now almost $20 billion in surplus, dwarfing the $4.2 billion forecast in May.
The money will instead be used to pay down debt and fund more government services, assistant treasurer Stephen Jones told ABC News.
It’s a good number, but we’re focused on the medium term, not just one budget figure, and we know there’s structural problems with the budget, big expenses coming in, in aged care, the NDIS, in defence,” he said.
“We’ve got to be able to meet not only this year’s and next year’s expenses but well over into the future.”
Mr Jones made the point that injecting money into the pockets of Australians would only add to the inflationary pressure that led to the cost-of-living crisis in the first place.
“I want to make this point: inflation is a problem,” he said.
“Looks like it’s on the turn now and that’s good news, but the worst thing the federal government could do at the moment was to take that $19 billion, $20 billion, wherever it ends up, and dump it into the economy, which is already facing inflationary pressures. Which is why restraint and paying down the trillion dollars’ worth of debt that we have on our books is our number one focus.”
The unexpected financial windfall for government coffers is due to much higher than expected income tax revenues spurred by record low unemployment.
Also playing a role in the surplus are the forecasts made in May, which used more negative economic data from earlier in the year to predict the final two months of 2022-23.
Speaking to 9News on Saturday, Prime Minister Anthony Albanese conceded that people may find it hard to reconcile news of the massive surplus with their own circumstances, but that many previously announced relief measures were beginning to come into effect.
“We understand that families are under cost-of-living pressure,” Mr Albanese said.
“But these [previously announced] measures will make a real difference. $3 billion, together with states and territories, on energy price relief, the cheaper childcare for 1.2 million families, the additional support for people to get into homeownership … increased paid parental leave, cheaper medicines.
“All of these will make a difference on cost-of-living pressures for families.”
What do you think should be done with the extra surplus? Is paying down national debt really a better option? Let us know what you think in the comments section below.