Treasurer Jim Chalmers will unveil a projected $36.8 billion budget deficit for 2025–26 in the mid-year economic and financial outlook, marking a $5.4 billion improvement on the pre-election fiscal outlook released in March.
The MYEFO shows the underlying cash balance has strengthened on the back of $20 billion in savings, improved policy decisions worth $2.2 billion, and restrained spending growth of 1.7%—around half the 30-year average—while banking most revenue upgrades.
Over the four years to 2028–29, the budget position is forecast to be $8.4 billion better than pre-election expectations, with the government having banked about 70% of revenue upgrades over the past three and a half years.
Savings include cuts to contractors and consultants, restoring social security deeming rates to pre-pandemic levels and reclaiming uncommitted Hydrogen Headstart funds, partially offset by $35 billion in added pressures such as disaster relief, age pension and defence costs, alongside $10 billion in new housing-related spending.