Tuesday’s budget will forecast a surplus of about $4 billion for this financial year – the first Commonwealth budget surplus in a decade and a half.
The budget projects an improvement of more than $143 billion over four years to 2025-26 compared to the Coalition’s final budget, brought down in March last year by Josh Frydenberg.
You are reading: Now it’s Labor promising the budget will be (briefly) back in black
The budget was last in surplus in Coalition Prime Minister John Howard’s final year – 2007-2008. After the global financial crisis threw it into deficit, in 2019 Frydenberg declared the budget “back in black”, but the COVID support measures meant the promised surplus was never achieved.
While the budget is forecast to be in deficit over the remaining years of the forward estimates, the deficits will be smaller in each year than previously forecast.
Revenue will be boosted by stronger than expected employment growth and record-high commodity prices, both of which are expected to ease off in future years.
The government will return to the bottom line 82% of revenue upgrades in this budget and 87% across its first two budgets. It says this compares to an average of about 40% under the former government and 30% under the Howard government.
Immediately after landing back in Australia after his trip to the coronation, Prime Minister Anthony Albanese confirmed the budget will widen access to the parenting payment (single) by raising the cut off point from when the parent’s youngest child is eight to the age of 14.
At present these parents – overwhelmingly women, and often victims of domestic violence – have to move to the lower JobKeeper payment when their youngest turns eight. The change will mean eligible single parents now on JobSeeker will receive an increase of $176.90 a fortnight.
Readmore : Amber warning issued for floods with ‘good chance’ people will be cut off
The issue has been personally important to Albanese, who was raised by a single mother on the disability pension. Albanese was opposed to the Gillard’s government’s decision to tighten eligibility, which followed an earlier decision to restrict parenting payments by the Howard government.
Albanese said the government’s action “will make a big and immediate difference for tens of thousands of mums, dads and children right around Australia”.
Read more: View from The Hill: Budget ‘centrepiece’ will be $14.6 billion cost-of-living package
The change, which requires legislation, is due to start from September 20. It will cost $1.9 billion through to 2026-27. Some 57,000 single principal carers will benefit, including 52,000 women.
The government last week announced it would scrap from next year the controversial ParentsNext program which imposed obligations for mothers with very young children.
Read more: Controversial ParentsNext program to be scrapped next year
Among the budget’s welfare decisions, JobSeeker is expected to be raised by a modest amount.
The budget will contain $17.8 billion in savings and re-purposing. This will take total savings across Labor’s first two budgets to $40 billion.
Readmore : Twitter begins removing blue checks from users who don’t pay
The budget’s centrepiece is a package of measures designed to ease cost-of-living pressures, costing a $14.6 billion over four years, including assistance for more than 500,000 households with their energy bills.
In an upbeat address to an enthusiastic Labor caucus meeting Albanese said the budget would be “in the best tradition of the Australian Labor Party”.
It would deal with immediate challenges, “but always with the eye on the future, on the medium and long term, to make sure that we’re delivering, laying those foundations for a better future that we promised”.
He said as well as not leaving people behind, the budget would be about the “aspiration of people for a better life”.
The caucus welcomed the new member for Aston, Mary Doyle, who took the seat from the opposition at the April 1 byelection.
The government is focused on minimising the inflationary effect of budget measures, with Albanese telling caucus inflation was “a tax on the poor”. The opposition is preparing to make a central argument against the budget that it is inflationary.
Shadow finance minister Jane Hume said tackling inflation should be the number one priority. “If they really wanted to tackle the cost of living, they would tackle inflation first and foremost” by reining in spending.
Deputy Liberal leader Sussan Ley said any surplus the government delivered would be “because of the strong economic book that they inherited from us”.
Author: Michelle Grattan – Professorial Fellow, University of Canberra