A surplus has many fathers but a deficit is an orphan.
With ex-Tropical Cyclone Alfred dashing plans for an April 12 election, Labor has been forced to deliver an unplanned and unwanted fourth budget with little fanfare on Tuesday.
The contrast could not be starker with last May, when Treasurer Jim Chalmers was pictured kicking the crimson leaves of the famous ‘budget tree’ in glee.
The photo opportunities and media engagements have been fewer, with much less in the way of pre-budget announcements and no surplus for Dr Chalmers to spruik.
After a surplus of $15.8 billion in 2023/24, Commonwealth Bank’s new chief economist Luke Yeaman expects to see an underlying budget cash balance that’s $22.5 billion in the red for 2024/25.
That’s at least an improvement on the $26.9 deficit predicted in the December mid-year update.
Veteran economist Saul Eslake says the run-up to the budget has been one of the most low-key he’s observed in his 45-year career.
He predicts it will almost certainly include some additional energy bill relief.
There’s currently no provision to extend the existing $300 rebates for households and $325 for businesses, meaning prices will skyrocket when they run out at the end of June.
And consumers are set for more bill shock this year after the Australian Energy Regulator’s recommendation to allow benchmark electricity prices to rise by up to 8.9 per cent.
Dr Chalmers said the budget would be focused on cost-of-living relief as well as strengthening the economy in the face of global uncertainty.
“So it will have that familiar combination of relief, repair and reform in the fourth budget, the same as it did in the third,” he told reporters on Friday.
“It will be a very responsible budget.”
The government faces a delicate balancing act, said Mr Yeaman, who until recently was intimately involved in delivering the budget as Treasury deputy secretary.
“There will be pressure to loosen the purse strings further, weeks out from an election campaign,” he said.
“However, too much spending risks undermining claims of ‘responsible economic management’ and giving the RBA a potential excuse to delay further interest rate cuts.”
Outside of already-revealed measures such as $1.2 billion in disaster recovery support following Alfred and $8.5 billion in new Medicare funding, Mr Yeaman doesn’t expect many major policy announcements.
“That said, pressure will build in the next term of parliament – whoever wins the election – to lay out a more ambitious growth agenda, tackle rising spending in disability, aged care and defence, and address the rising tax-to-GDP ratio,” he said.
Additional spending is likely to cause forecast budget deficits to blow out in future years, despite stronger revenue from higher commodity prices, he predicted.
Mr Eslake was equally concerned about the need to address Australia’s economic challenges, saying both sides of politics need to have an adult conversation about the least economically damaging and fairest ways to do it.
But he didn’t hold out much hope.
“I’m more likely to see a thylacine on my lawn,” he told AAP from his native Tasmania.
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