The budget bottom line is expected to be $44.9bn stronger than forecast in December, and more than $250bn stronger than what the Albanese government inherited in 2022, as Treasurer Jim Chalmers prepares to hand down the 2026-27 federal budget.
Reform to the capital gains tax and negative gearing, a one-off cash stimulus, and fuel security are expected to be top of the agenda when Mr Chalmers presents the next financial year’s budget on Tuesday evening.
The budget is expected to show that deficits are lower in every year compared to both the mid-year budget update in December and what the Albanese government inherited in 2022.
The bottom line is forecast to be $263.8bn better than what was inherited that year.
That is driven by a further $63.8bn in savings and reprioritisations, consecutive updates that have returned every single dollar of revenue upgrade to the bottom line for the first time on record, and real payments growth averaging just 1.5 per cent for the eight years to 2029-30 – the lowest rolling eight-year average in almost three and a half decades.
“Under this Labor government, debt is lower, deficits are smaller and the budget bottom line is stronger,” Mr Chalmers said.
“We’ve delivered a big improvement in the budget bottom line since we were elected and another improvement since the last update in December.
“What’s driving this improvement in the budget are the savings we’ve found and the spending restraint we’ve shown and you’ll see that (on Tuesday).”
Finance Minister Katy Gallagher said the government had made “responsible decisions” to improve the budget while continuing to invest in services.
“We’ve found almost $180bn in savings and reprioritisations since coming to government, helping put the budget on a stronger footing,” she said.
“This is about responsible economic management, making the budget more sustainable while still delivering for the community.”
