Jim Chalmers with Murray Watt and Anika Wells being briefed about recovery efforts following Ex-Tropical Cyclone Alfred – a billion-dollar budget hit. Photo: Jim Chalmers Instagram.
The Federal Budget is one week away from being delivered, and it’s not exaggerating to say that right now, it is still quite the moving feast.
Numbers are different today than they were a week ago, and there remains a lot of last-minute scrambling to get the budget documents in order and up to date.
That is mostly to do with two things – which can both be blamed on Ex-Tropical Cyclone Alfred.
First, the government wasn’t expecting to be handing down the budget at all next week.
The month of March was meant to be mid-campaign, with election day in early April.
Alfred stopped that from happening.
Second, Alfred has also blown out the budget figures thanks to the disaster response payments.
Treasurer Jim Chalmers has already put a number on it.
“Treasury expects there will be about a $1.2 billion hit to economic output, just as a consequence of Ex-Tropical Cyclone Alfred,” he said on Monday (17 March).
“That’s about a quarter of a percentage point in GDP.”
The money is being directed towards funding to rebuild affected communities.
Fruit and vegetable prices are expected to jump and rebuilding costs for farms and homes will have a rising impact.
About 44,000 insurance claims have already been lodged, with early modelling putting the cost at $1.7 billion.
The temporary shutting of businesses lost about 12 million work hours.
“As a consequence, there will also be costs to the budget, and those costs will be substantial,” Dr Chalmers said.
And while Labor’s past budgets have delivered a surplus, those days are over.
The Treasurer has confirmed this budget will be “printing a deficit for this year”, adding that it will still be lower than what the Coalition delivered when it was last in government.
“A defining feature of our first three budgets was responsible economic management. That will be a defining feature of the fourth as well,” he said.
“Even this year, where we will be printing a deficit for this year, it will be much, much smaller than what we inherited from our political opponents, and that shows the progress we have been able to make.”
Dr Chalmers will be previewing the budget in a speech today (Tuesday), saying the estimated costs to the budget over the forward estimates are only preliminary.
The budget will reflect some of those immediate costs, the Treasurer will say, and the government will make provisions for more to come.
That all means a big new pressure on the budget.
The government has already co-sponsored with the states $30 million in support for immediate recovery costs, with millions of dollars being provided in hardship payments.
This is on top of disaster relief payments that have already been budgeted for.
“At MYEFO, we’d already booked $11.6 billion for disaster support nationally over the forward estimates,” the Treasurer says.
“With all of this extra funding, we expect that to rise to at least $13.5 billion when accounting for our provisioning, social security costs and other disaster-related support.”
Other than the Alfred blowout, there is likely to be little by way of surprises in next week’s budget – and even Alfred’s costs are not a surprise now that the Treasurer has previewed them.
Because the government had hoped to be full-flight in election mode in March rather than being bothered by a budget, it had already made a string of spending announcements that it now has to repeat in the budget.
In just the past few weeks, funding announcements have included $8.5 billion to boost Medicare, $644 million for new Urgent Care Clinics, $7.2 billion for the Bruce Highway and a multi-billion dollar rescue package for Whyalla Steelworks.
For its part, the Coalition has released its own pre-budget analysis, saying the average amount of tax Australians would pay this year would be $3500 higher than in 2021-22.
Shadow treasurer Angus Taylor says the cost-of-living crisis is hitting too many too hard.
“These are the pains that Australians are feeling,” Mr Taylor said.
“We need a budget that restores Australians’ standard of living.
“It is clear taxes are on the rise if Labor’s policy settings continue. Labor abolished the tax cap in its first budget, the Coalition will restore it.”
What this all adds up to is a Federal Government and the Opposition bracing for a fight over budget numbers when they were both hoping to be already on the hustings in direct appeals for votes.
That won’t be long now, though.
Original Article published by Chris Johnson on Riotact.
