TRANSCRIPT
"Our strategy over the past 18 months has delivered an historic turnaround in the budget position."
Treasurer Jim Chalmers is celebrating a better-looking budget bottom line.
Higher tax revenue, thanks to higher commodity prices and a strong labour market, are filling government coffers and shrinking government debt.
The Treasurer's mid-year economic update has revealed a budget deficit of just $1.1 billion, down from the $13.9 billion forecast in the May budget.
The government is choosing to bank 92 per cent of the increase in revenue, a move Jim Chalmers says will help pay down debt and take pressure off rising inflation.
"This budget update and this government is all about responsible economic management. Responsible economic management is what puts downward pressure on inflation and eases the cost of living. And because of our efforts we are getting the budget in much better nick (condition) and making more room for our priorities - and that's what these numbers we are releasing today show."
The reduced debt should save the government over $145 billion in interest repayments alone over the next 12 years.
But not everyone is happy.
New inflation figures showed the consumer price index for October fell to 4.9 per cent.
While lower than expected, it's still well above the Reserve Bank's target range of two to three per cent.
Opposition Treasury spokesman Angus Taylor says nothing in the forecasts will actually address inflation or ease pressure on families.
"The Treasurer and Finance Minister talked about the Government budget; well the one budget they avoided talking about was the household budget. It is in tatters, we have seen interest cost triple since Labor came to power, we have seen, as I've said, a 27% increase in income taxes paid by households and household disposable income down by 8.6 per cent. "
And while the government can boast of a lower deficit, the forecasts also show real wages have not grown in line with forecasts.
Independent economist Chris Richardson says any relief for families will be slow in coming.
"The forecasts today essentially say, 'Well wages will start to make back ground on prices but not by much'. Implicitly, it says interest rates don't go down for a while. The only place where there will be some relief coming is taxes - that's the famous stage three tax cuts in the middle of 2024."
Those so-called famous tax cuts will see a flat tax rate for people earning between $45,000 and $200,000.
Edwina MacDonald, from the Australian Council of Social Services ((ACOSS)), is urging the government to scrap the Morrison government era tax cuts, saying they won't help those who need it most.
"We also are calling on the government to get rid of the stage three tax cuts which we know will be wasteful and inflationary. We know the tax cuts will be putting money into the pockets of the people who need it the least while other people continue to suffer and go without."
Instead, ACOSS wants the government to address budget pressures on middle and low income earners by increasing income support payments and capping rents.
The Treasurer says the government's position on tax cuts remains unchanged and because it has the balance right through measures already in place.
"We have also found, I think, a really effective way to provide cost-of-living relief to people on low and middle incomes, whether it is increases to income support, changes related to out-of-pocket health costs, rent assistance, early childhood education, $23 billion of cost of living help across ten different areas, which is targeted to making life a little bit easier for people who are doing it tough."
