Australia's fiscal outlook improves with lower deficit, higher tax revenue

The Australian government's budget sees a $39.6 billion improvement over the next four years, reflecting a smaller deficit of $1.1 billion for the current financial year.

Despite concerns about inflation, Treasurer Jim Chalmers refrains from extensive spending. Increased tax revenue of $64.4 billion, driven by high commodity prices and corporate profits, contributed to the favourable fiscal outlook.

While 92% of this surplus is returned to the coffers, rising interest rates elevate the cost of servicing debt, surpassing expenditures like the NDIS.

Chalmers emphasised the ongoing rollout of cost-of-living support and leaves room for potential relief in the lead-up to the May budget.

The mid-year update outlines additional spending of $5.3 billion, including measures such as doubling the critical minerals facility and boosting the housing supply.

Revenue-side changes involve a 15% increase in passport fees, adjustments to penalty units for fines, and the expansion of the luxury car tax to more vehicles by July 2025.