Australia's 'lucky' budget numbers set for misfortune, economist Chris Richardson warns

The federal coffers are set to be boosted by $365 billion off the back of larger tax receipts mainly based on luck and not policy, an independent economist says.

But the luck is beginning to run out, with iron ore prices, inflation and migration all easing, Chris Richardson says, forecasting the bottom line will be $20 billion worse off than Treasury predicts across the next four financial years

War drove up global prices — including Australian exports — and migration increased population, both of which increased tax collection.

Mr Richardson said tax revenue was also bolstered by high inflation that re-sliced the economic pie, taking more away from families.

Labor spent $104 billion since coming to office in 2022 while only raising taxes by $44 billion, meaning there was a $60 billion gap in the bottom line, he said.

“It’s a wasted opportunity, the luckiest government Australia has ever seen — at least in budgetary terms — didn’t take the opportunity to get the national budget better prepared for the long haul,” he said.

Tobacco, superannuation and resource taxes were branded “dumb” to “diabolically dumb”, blowing budget black holes as the years went by.

The $20 billion hit to Treasury’s predicted cash headline deficits is due to “increasingly dodgy action off-budget”, Mr Richardson said.

Off-budget spending doesn’t hit the underlying budget position — such as when the government buys an asset that retains its value.

Mr Richardson estimated the budget would be $32 billion in the red in 2024/25, almost $44 billion in 2025/26, $27.5 billion in 2026/27 and $30 billion in 2027/28 ,— all billions of dollars worse than Treasury predicted.

Treasurer Jim Chalmers is tempering expectations ahead of national accounts data due to be released on Wednesday, saying slow economic growth was anticipated.

A mid-year budget update will also be released in the coming weeks ahead of a planned federal budget in March 2025.

“We’ve been up-front for some time that pressures on the budget are becoming more challenging, not less,” Dr Chalmers said.

“We’ve overseen the biggest-ever fiscal turnaround in a single term, turning two big Liberal deficits into two substantial Labor surpluses, and that’s a powerful demonstration of the Albanese government’s responsible economic management.”

Whether the federal budget will be handed down before an election is called is a point of frequent speculation.

Dr Chalmers has delivered two consecutive budget surpluses, largely due to soaring commodity prices, with the next fiscal update expected to forecast a sea of red into the distant future.

It adds to the case that the prime minister will pull the election trigger if he faces the prospect of having to stand by an official budget deficit.