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.
Chalmers said the bottom line had improved in every year of the forward estimates, describing the update as evidence of "sensible and responsible" budget management despite mounting fiscal pressures.