Record $20 billion surplus coming: Chalmers

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Australia is set to record its largest-ever budget surplus of $20 billion or more, Treasurer Jim Chalmers has revealed as he left the door open for future cost-of-living relief.

Chalmers warned households not to expect additional support from the 2022-23 surplus, as the government was focused on rolling out measures announced previously, but he said the stronger budget position would give the government greater flexibility going forward.

Treasurer Jim Chalmers at the G20 finance meeting in India last week.Credit: Reuters

“We’re not currently working on a new package of cost-of-living relief. We’re focused on rolling out billions of dollars in cost-of-living relief that we have already announced,” he said.

“But what a much better budget position allows for is it gives you the flexibility down the track in future budgets.”

The final budget figures for last financial year will be confirmed in the coming weeks, but Chalmers said the surplus was likely to be just above $20 billion.

“It’d be a record in cash terms,” he said.

Australia’s largest surplus to date was $19.8 billion in 2007-08.

In May, Chalmers forecast a $4.2 billion surplus for 2022-23 – the first in 15 years – but since then, significant increases in tax revenue from income tax and higher commodity prices have helped deliver about $16 billion more in revenue than had been expected.

The surplus would help “take some of the edge” off the federal government’s debt interest bill and Chalmers said it was important to set aside a large chunk for the future as the economic outlook remained uncertain.

“Even though the budget is in much better nick in the near term, we’ve still got those longer-term intensifying pressures,” he said.

The treasurer also announced Chris Barrett would be the next chair of the Productivity Commission, taking over from Michael Brennan in September.

Chalmers said Barrett has been tasked with renewing the commission as part of the government’s shake-up of the country’s major economic institutions.

“Chris’s appointment recognises that if we want to build a stronger economy, then we’ve got to build stronger economic institutions, and that means renewing and refocusing and revitalising the Productivity Commission,” he said.

But the appointment will be heavily scrutinised by the Coalition, with shadow treasurer Angus Taylor saying the Coalition was not consulted.

Barrett has been a deputy secretary for Victoria’s Treasury and Finance Department since January 2021, was Australia’s OECD ambassador in 2011 and was chief of staff to former Labor treasurer Wayne Swan.

“The test of Mr Barrett’s performance will be in whether he pursues genuine productivity reform or rubber stamps Labor’s union-led agenda that business is warning will take productivity further backwards,” Taylor said.

Chalmers said the commission would remain “fiercely independent”.

Barrett was appointed following interviews with two departmental secretaries and the Australian Public Service commissioner. The decision was formally approved by cabinet on Monday.

The Australian Bureau of Statistics will publish the latest quarterly inflation figures on Wednesday, a key piece of data that will help the Reserve Bank board decide whether it should lift interest rates from 4.1 per cent at next week’s meeting.

Chalmers said even though inflation – which was 7 per cent in the year to March – was still high, it was moderating.

“It’s really important that the government is not adding unnecessarily to those pressures and so by banking such a big proportion of the upward revisions to revenue, then we’re making our contribution on that front,” he said.

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