The Albanese Government is building a stronger economy and stronger Budget, with smaller deficits and much lower debt than we inherited.
Responsible economic management is a defining feature of this Government and this Budget.
While the global economy is uncertain and Australians are still under pressure, we have made substantial progress in turning the economy and the Budget position around.
Inflation is down, unemployment is low, wages are up, interest rates have started to come down, growth has rebounded solidly.
At the same time, the Government has delivered the biggest Budget turnaround in a Parliamentary term – improving the Budget by $207 billion – while delivering responsible cost of living relief to millions of Australians to ease pressures on households.
We’ve turned two big Liberal deficits into two Labor surpluses and the deficit in our third year, of $27.6 billion, is almost half of what we inherited from the Coalition.
This Budget improves the bottom line by $1.6 billion over the forward estimates compared to MYEFO, and the deficit in 2025–26 is forecast to be $42.1 billion – lower than MYEFO and lower than what we inherited.
We’ve done this by limiting real spending growth, finding savings and banking the majority of revenue upgrades over the past three years.
Fiscal policy worked with monetary policy to return inflation to the target band in the second half of last year, while keeping unemployment near historic lows and the economy growing.
Our fiscal settings are consistent with inflation sustainably returning to the RBA’s target band, which Treasury now expects to occur six months earlier than anticipated.
Since the Government has come to office:
- The Budget position has improved by $207 billion over the seven years to 2028–29 and is better in every year over the forward estimates.
- Debt is $177 billion lower this year, which will help us avoid around $60 billion in interest repayments over the decade.
- Real payments growth is estimated to average 1.7 per cent per year over the seven years to 2028–29, which is around half the average under our predecessors.
- We have identified $94.1 billion in savings and reprioritisations.
- We have returned 69 per cent of upwards revisions to tax receipts compared to our predecessors who averaged around 40 per cent.
There is heightened uncertainty in the global economy including from escalating trade tensions, a slowdown in China and the ongoing war in Europe.
Australia has not been immune to challenging global conditions but we are one of the best placed economies to navigate them.
When we came to government, we inherited a trillion dollars of debt and large deficits.
In less than a term, we’ve got the debt down, we’ve delivered two surpluses when our predecessors delivered none, and we’re on track to deliver lower deficits.
We’ll continue to do what we can to ease pressure on Australians with tax cuts, energy rebates, higher wages, strengthening Medicare and cheaper medicines at the same time as we repair the budget and Build Australia’s Future.