The extra tax revenue generated by the Iran war will be saved in its entirety, as the federal government downplays major cost-of-living relief in next week’s federal budget. Source: ABC News.
Treasurer Jim Chalmers has confirmed all upward revisions to revenue will be banked to help pay down federal debt, and savings used to manage growing pressures on the budget from hospitals, defence spending and inflation.
The government is expecting a revenue boon driven by higher inflation and commodity prices in the near term, with budget analyst Chris Richardson estimating it could tip about $36 billion extra into government coffers over four years.
But the windfall will be used to pay down debt now forecast to reach a trillion dollars next financial year.
And savings measures, in particular a $35 billion belt-tightening on the National Disability Insurance Scheme, will be used to improve deficits that in December totalled $143.2 billion over four years, and offset spending on hospitals and defence already committed earlier this year.
Managing expectations that next week will ease hip-pocket pain, Mr Chalmers says the government will save more than it spends when it hands down its budget.
“Responsible economic management has been a hallmark of this Albanese Government and the May budget will be our most responsible yet,” Mr Chalmers said in a statement.
“In this budget you’ll see more responsible economic management and more restraint from the Albanese Government.”
Prime Minister Anthony Albanese is preparing to break an election commitment and overhaul property tax perks in this month’s budget, to give younger Australians a “fair crack” at owning their own homes.
While the Iran war will lift the government’s revenue take, borrowing costs have also risen due to Australia’s inflation woes and the Middle East conflict, and the Treasurer says “that will hit the budget hard”.
Additionally, social security payments tied to inflation are an “unavoidable” spending pressure draining the government’s coffers. An extra $9 billion in payments is forecast for the disability support pension, Jobseeker and aged pension, which are all indexed and rising in line with inflation.
It means the government will have little money to play with, despite tax windfalls and the $22 billion in net savings from NDIS reforms, one of the single largest savings measures this century.
FULL STORY
Treasurer to bank tax windfall from Iran war in federal budget (By Jake Evans, ABC News)
