Australia Achieves Second Consecutive Budget Surplus as Inflation Decreases Significantly

Australia’s government is set to announce its second consecutive budget surplus, thanks to strong employment and high commodity prices. The surplus of A$9.3 billion for the fiscal year to June 2024 comes after a A$22.1 surplus last year, marking the first back-to-back budgets in the black in nearly two decades.

This strong fiscal position will allow the Labor government to provide more cost of living relief and industry incentives. Treasurer Jim Chalmers expects the relief measures to help tame inflation, with the government predicting inflation could ease to the central bank’s 2-3% target band by the end of this year.

The Reserve Bank of Australia (RBA) will be pleased with the news, as it does not expect inflation to return to target until late 2025. Chalmers emphasized the government’s responsible economic management, stating that there is still more work to be done despite the progress made.

Details of the budget will be announced in parliament, with investments planned for Labor’s Future Made in Australia subsidy program, defence funding, and measures to cut costs for higher education. The government also faces criticism over soaring prices for household goods and services, with a strong first-quarter inflation report raising the risk of another rise in interest rates.

Chalmers is under pressure to curb spending to avoid stirring up inflation, but he defends the measures as necessary. With Australians heading to the polls early next year, the budget announcement will be closely watched for its impact on the economy and the upcoming election.