Jim Chalmers: Treasurer defends Labor’s ‘substantial’, ‘responsible’ spending ahead of mid-year budget update

Treasurer Jim Chalmers launched a media blitz on Wednesday morning ahead of the release of a mid-year budget update where the Government will state that the nation’s deficits are shrinking.

The exact figures to back up the Treasurer’s calculations will be released mid-morning, but in the run-up to the eagerly anticipated report, the Albanese Government has already claimed credit for achieving a budget position that is $200 billion better than what it inherited.

The budget would reveal a smaller deficit, “even when there’s slippage after that because of important investments in areas like Medicare, medicines and pensions,” Treasurer Jim Chalmers told Sky News.

“You can see over time, even with a little bit of slippage in the later years, those two surpluses and the smaller deficit this year are making a substantial difference to the amount of debt that the budget is carrying and making room for our priorities, including the cost of living help,” he said.

The Government’s sums will show that gross debt will be $177 billion lower in 2024-25 than what was forecast at the Pre-election Economic and Fiscal Outlook (PEFO), helping to avoid around $70bn in interest costs over the decade.

The results defy predictions by some economic analysts that the MYEFO would show deficits greater than the surplus years as the Government grapples with post-pandemic weaker economic growth and relief for the cost-of-living crisis.

The Treasurer also played down assertions the Government could attempt to include pre-election sweeteners ahead of next year’s Federal poll, after the Daily Telegraph reported that the update would include a $5.5 billion war chest.

Dr Chalmers told ABC News the reported figure already fell far short of the $15.7 billion the previous Coalition government drew on before the last election cycle.

“That’s things which aren’t ready to be put out. Maybe there’s a negotiation underway, or an element of commercial in confidence or something like that,” he said.

“The decisions taken not yet announced line in the budget update today will actually be smaller than what we saw under our predecessors in the last update before an election. It won’t stand out as a particularly unusual number to have there.”

The MYEFO has taken on outsized importance as it may be the last major economic update from the Government if an election disrupts the March budget.

Dr Chalmers has insisted that preparation is underway for a March budget even as speculation rises that Prime Minister Anthony Albanese may take the country to the polls well before the May 17 deadline.

“This mid-year budget updates (is) not a mini budget. It is not an opportunity to announce a whole slew of new policies,” he told ABC News.

“Our focus is on rolling out the really quite substantial and meaningful but responsible cost-of-living help that we’ve already budgeted for and already announced.”

The MYEFO release sets the stage for a bitter showdown between Labor and the Coalition over who can handle the economy better.

Coalition leaders were on the attack early on Wednesday, immediately dismissing the Government’s rosier picture of the economy.

“I just issue this challenge to [Jim Chalmers]. Can he talk about his budget without referring to the Opposition, or what a contrasting situation might have been in another scenario years ago?” deputy opposition leader Sussan Ley told Sky News.

“Can he please just address the issue that all Australians want, which is, how is this budget going to improve my standard of living and make my life better, just like you promised Labor Government?”