(Bloomberg) — Australia posted back-to-back budget surpluses for the first time in 16 years.
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The underlying cash surplus was A$15.8 billion in the 12 months through June this year, or 0.6% of gross domestic product, according to the Treasurer’s office. That exceeded a A$9.3 billion windfall predicted in the May budget.
Treasurer Jim Chalmers told reporters on Monday that the larger surplus was primarily due to restraint in spending, rather than a larger tax take.
“These surpluses are all about fighting inflation, making room for cost of living relief, building a buffer against global economic uncertainty,” he said at a press conference in Canberra.
It comes as the center-left Labor government faces an election before the end of May, with recent polling showing mounting discontent among voters as inflation remains sticky and interest rates stay high.
A recent Newspoll survey showed primary support for Labor has dipped to its equal lowest since the 2022 election with housing — including rents and mortgages — emerging as the most significant cost-of-living issue, eclipsing grocery and energy bills.
With just a slim majority of three seats at present, the Labor government could be forced to govern in agreement with minority parties after the next election if its polling doesn’t improve.
As many central banks around the world enter a policy easing cycle, the Reserve Bank of Australia this month held its key interest rate at a 12-year high of 4.35%. Governor Michele Bullock has warned borrowing costs are unlikely to come down anytime soon, as the RBA waits for inflation to “sustainably” return to its 2-3% target.
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The last time Australia achieved back-to-back surpluses was in the 2007 and 2008 financial years.
However, Chalmers said Monday that Australians shouldn’t necessarily expect a third surplus, despite a surprisingly tight labor market and positive signs for the global economy following the announcement of economic stimulus in China.
“We’re not complacent about the fiscal challenges that we confront,” he said.
(Updates with Treasurer Chalmers’ press conference.)
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