The Albanese Labor Government is delivering a stronger and more sustainable Budget with smaller deficits, less debt and net policy decisions that improve the bottom line.
Responsible economic management is a defining feature of this Government and this Budget is our most responsible yet.
Strong fiscal discipline is even more important at a time of heightened global uncertainty, and that’s exactly what we’re delivering.
Decisions in this Budget mean we are saving more than we’re spending, compared to the mid-year update.
Our saves are greater than revenue upgrades and the budget impact of tax reform.
We have taken difficult decisions for the right reasons, delivering a Budget that is now $44.9 billion stronger than was forecast at MYEFO.
It is more than a quarter of a trillion dollars better than what the Coalition left us.
This is possible because of our responsible approach to finding savings and reprioritisations, spending restraint and banking all revenue upgrades.
These actions mean that this budget update is helping to take the pressure off inflation and building fiscal buffers at a time of global uncertainty.
The Government’s decisions mean:
- The Budget is $44.9 billion stronger than the mid-year update and $264 billion better than what we inherited.
- The deficit in 2026-27 is $31.5 billion, $2.8 billion lower than MYEFO and $7.8 billion lower than we inherited.
- Debt is down a further $18 billion in 2026-27 than forecast in the mid-year update and is now $173 billion better than we inherited. This means we avoid more than $70 billion in interest costs over the decade.
- The peak in gross debt is now forecast to be 35.8 per cent of GDP, 1.2 percentage points below the mid-year update and 9.1 percentage points below what we inherited.
- Gross debt as a percentage of GDP remains below what we inherited in every single year.
- We’ve found a further $63.8 billion in savings and reprioritisations, taking the total since coming to government to almost $180 billion.
- Net policy decisions are positive for the second consecutive update, with net decisions accounting for provisions totalling $26.1 billion over the forward estimates.
- Real payments growth averages just 1.5 per cent for the eight years to 2029-30, the lowest rolling eight-year average in almost three and a half decades. Average growth is less than half the 30-year average and around a third of the 4.1 per cent average of our predecessors.
- For the first time on record, consecutive updates have returned every single dollar of revenue upgrade to the bottom line. This means the Government has returned 76 per cent of revenue upgrades. Our predecessors never returned every dollar of revenue upgrade, averaging a return of around 40 per cent.
Looking further ahead, the budget bottom line is better and debt is lower in every year of the medium term.
This is a result of disciplined decisions the Government has taken to rebuild fiscal buffers, including putting the NDIS on a sustainable growth trajectory, banking revenue upgrades and structural reforms to the tax system.
While there is a lot of uncertainty, Treasury are projecting the Budget will return to balance over the medium-term. They would not project this were it not for the Government’s structural improvements to the Budget.
Australia is not immune from uncertainty and volatility in the global economy as a result of conflict in the Middle East.
We are well placed and well prepared to confront these challenges with faster growth at the end of last year than any major advanced economy, low unemployment, solid wage growth and stronger public finances than most of the developed world.
Australia remains one of only nine countries with a AAA sovereign credit rating from all three major ratings agencies and has lower gross debt than every major advanced economy.
When we came to Government, we inherited a trillion dollars of debt, bigger deficits and stagnant wages.
We’ve made real progress on the Budget at the same time as we’re providing responsible cost of living relief like new tax cuts for Australian workers, making the economy more productive and funding the services Australians rely on.
This Budget is all about resilience and reform, and a stronger and more sustainable Budget is central to this agenda.