Treasurer Jim Chalmers is playing down the prospect of a second consecutive budget surplus as he pitches his economic blueprint.

The government expects to book a $4.2 billion underlying cash surplus in this financial year – the first in 15 years.

This will be followed by a better-than-expected deficit of $13.9 billion in 2023/24.

Asked if a second surplus was on the cards instead, Dr Chalmers said he was taking a cautious approach.

“We’ve got this big improvement in revenues in the near term and we’ve taken the most responsible approach to that and that’s why we’re forecasting a surplus for this year,” he told Seven’s Sunrise program on Wednesday.

“But we’ve got some structural challenges in the budget. We made a heap of progress on those last night, but there will be more work to do.”

Asked if he planned to push ahead with stage three income tax cuts slated for 2024/25, at a cost of $69 billion over four years, Dr Chalmers said the government’s position hadn’t changed.

“They don’t come in for more than a year, they haven’t been a focus of the deliberations for this budget at all,” he said.

Dr Chalmers emphasised the 2023/24 budget was about helping people doing it tough and again rejected concerns a near $15 billion cost-of-living package could fuel inflation and lead to more interest rate rises by the Reserve Bank of Australia.

“It doesn’t all hit the economy at once … and broadly, across the economy, we don’t expect to be adding to inflationary pressures,” he said.

Independent economist Chris Richardson, of Rich Insights, said the budget lacked the hard decisions needed to allow the central bank to lean away from rate rises because it was pumping money into the economy.

He welcomed the lift to JobSeeker and other assistance but said that should have been accompanied with offsetting money-saving and revenue-raising measures.

“To be fair to this government, a lot of the spending they’ve done, they needed to do – they just also needed to make other decisions to save money to take pressure off,” Mr Richardson told Sky News.

He said the government could have taken the opportunity to raise more revenue, noting that adjustments to the petroleum resource rent tax were “much too modest”.

When he handed down the budget on Tuesday night, Dr Chalmers said it had been carefully calibrated in terms of spending.

“The restraint we’ve shown and the investments in the supply side of the economy, and the way we’ve targeted and staged our cost of living package is because inflation is the biggest challenge in our economy,” he said.

Opposition finance spokeswoman Jane Hume said the budget should have done more heavy lifting to drive down inflation.

“Looking through the budget papers, every line says this isn’t inflationary,” she told Sky News on Wednesday.

“But that’s not enough – is it actually reducing inflation, and if it is, well where, because we can’t find a policy that has a sustained deflationary effect.”

Treasury expects the annual rate of inflation to be back in the two to three per cent band in 2024/25 when it’s forecast to fall to 2.75 per cent from six per cent this financial year.

Poppy Johnston
(Australian Associated Press)