Australia's budget deficit to balloon by $21.8 billion over next four years
Australia's budget is expected to spiral into deeper deficits over the next four years as government spending outweighs revenue.
Treasurer Jim Chalmers today blamed the deficits on "unavoidable spending" while delivering the Mid-Year Economic Fiscal Outlook (MYEFO).
The deficit this year, $26.9 billion, is a "little bit smaller than expected", Chalmers said.
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Treasurer Jim Chalmers delivered the mid-year economic outlook today. 9News
Over the next four years, it's forecast the deficit will balloon to a combined $143 billion - some $21.8 billion worse than at budget.
Chalmers and Finance Minister Katy Gallagher said $8.8 billion in spending was for unavoidable projects including new infrastructure and domestic violence funding.
"We have made a lot of progress," Chalmers said today.
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"We are on track for a soft landing in our economy. The economy is growing, but slowly."
"Our gross debt position is a fraction of what we see in comparable countries," he added.
Gallagher also blamed the "slippages" in the budget on urgent spending.
"While the budget position is $1.3 billion better off than forecast at budget, the slippage across the forward estimates is really down to urgent, unavoidable or automatic spending," she said.
"Unavoidable spending is half of those decisions in MYEFO."
In a grim forecast, net debt is projected to hit $1.6 trillion by the 2027/28 financial year.
This is up from $940 billion this year.
Chalmers said the interest carried on the debt is a major concern.
Finance minister Katy Gallagher also blamed the fast-growing deficit on unavoidable spending. 9News
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"That is because the more debt we carry in the budget, the more interest we pay on that debt," he said.
"We can all think of better destinations of those billions of dollars than paying interest on debt, and that's one of the motivations for the work that all of us, but especially Katie, have done in trying to get that debt down."
Within the budget is a mystery $5.5 billion which has not yet been announced.
Chalmers said a key priority is rolling out the cost of living relief to Australian households.
"People getting those tax cuts, the energy bill relief, cheaper medicines, cheaper early childhood education, rent assistance, student debt relief, getting wages moving again..." he said.
"Those are our efforts to help people with the cost of living and to take some of the pressure off household budgets."
The treasurer then said he believed the Albanese government has handed down a "responsible set of books" ahead of the federal election net year.
The budget deficit follows two financial years of surpluses in 2022/23 and 2023/24.
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