Treasurer Jim Chalmers has revealed that he expects Australia’s surplus to exceed the projected $9.3 billion, with the exact figures to be released in September.
Speaking to Channel 9 on Monday morning, Chalmers said “the surplus is coming in a bit bigger”.
“This could be the biggest back‑to‑back surpluses on record.
“We expect a surplus in the middle teens of billions, and the difference is not actually more tax revenue. It’s about less spending. And those two surpluses, which would be the first back‑to‑back surpluses in almost two decades – the first back‑to‑back surpluses in about half a dozen treasurers.”
Chalmers commended his government for “managing the economy in the most responsible way, delivering those surpluses and providing cost-of-living help”, surpluses that, he said, could put downward pressure on inflation in the economy.
“Something like 750,000 people will get a tax cut today. About 9 million have already got theirs already, and 2 million more in the next fortnight or so. And that’s just one of the ways that we’re helping people with these cost‑of‑living pressures, but doing it in a meaningful and substantial way, but in a responsible way as well, in the context of handing down a couple of surpluses already to help us in the fight against inflation,” Chalmers said.
Back in May, the Treasurer said a second surplus of $9.3 billion (0.3 per cent of GDP) is expected in 2023–24, an improvement of $10.5 billion since the Mid-Year Economic and Fiscal Outlook (MYEFO). However, looking forward, things are likely to get a little sombre, with the Treasurer earlier forecasting a deficit of $28.3 billion in 2024–25.
Chalmers’ positive update on the 2023–24 surplus comes ahead of the June quarter inflation figures, which will be released on 31 July.
“We’ll find out more about where inflation’s up to, where it was up to in the June quarter. We’ll get that in the next couple of weeks. We expect the primary drivers of inflation in that quarter to be rent and insurance and petrol – none of those things are about government spending, but we can play a helpful and meaningful role and that’s what we’re doing and the two surpluses are a demonstration of that,” the Treasurer said on Monday.
He shared that the governor of the Reserve Bank highlighted the significance of the surpluses, noting that “having two surpluses is crucial, as they are helping to reduce inflationary pressure in our economy”.
The RBA is scheduled to meet on 6 August.
Speaking to InvestorDaily earlier this month, AMP’s Shane Oliver said he doesn’t expect the central bank to raise rates unless there is a significant surge in CPI.
“I think the likely scenario is the RBA holds, for the simple reason we are seeing a lot of soft economic data in Australia,” the chief economist said.
As at the 12 July, the ASX 30 Day Interbank Cash Rate Futures August 2024 contract was trading at 95.62, indicating a 20 per cent expectation of an interest rate increase to 4.60 per cent at the next RBA board meeting.
