While inflation hurts ordinary workers, it is useful for the budget. Figures released Friday showed that the deficit for the first 11 months of 2021-22 was $ 34.6 billion. It was projected to be $ 63.7 billion by the end of May.
Improvement has been driven by both sides of the budget. Personal income tax collection exceeds expectations by $ 3.2 billion, corporate tax collection $ 8.4 billion better, while retirement income is $ 1 billion stronger.
Spending is also slightly lower in key areas. Spending on housing services is only 67% of the forecast for the whole year, while spending on transport and communications is only 43% of expectations.
Chalmers said the best result in May was a reflection of rising commodity prices due to the war in Ukraine and Australia’s tight labor market.
But he warned there was high volatility, noting that iron ore prices had fallen 12 per cent last week.
Rising global interest rates also meant that public debt, now at $ 892 billion, would be more expensive than expected.
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“We must not assume that these budget improvements are a constant feature of the budget. We cannot be pleased with this. There are also a number of issues working in the other direction, ”he said.
“One of them is the fact that if you take into account that $ 1 trillion in liberal debt that we’ve inherited … as interest rates go up, debt service costs go up, too. That’s another pressure. on the budget.
“The budget has a pretty big structural deficit when you consider the decent and justified spending that is in the budget. And rising borrowing costs are one of those additional pressures.”
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