Resource-rich Australia expects its first budget surplus in 15 years, Australia’s treasurer said on Tuesday, heralding a victory for a year-old, raw materials-fueled centre-left government.
“We now expect a surplus this year and a smaller deficit after that,” Jim Chalmers told the media, hours before unveiling what was expected to be a surplus of A$4 billion (US$3.6 billion).
Chalmers described “the largest financial turnaround on record” as evidence of “responsible economic management”, as his party seeks to define itself as a vigilant custodian of the public treasury.
Labor came to power in May 2022 after nearly a decade of Conservative rule that saw state coffers strained by a 19-year-old bird flu epidemic, sweeping tax cuts and an explosion in defense spending.
The Conservative government under Scott Morrison promised a budget surplus in 2020, but could not achieve it due to the pandemic.
The last time Australia recorded a budget surplus was in 2007, when Conservative John Howard was still prime minister.
The projected surplus for the current fiscal year will be generated partly by the increase in tax revenues – due to the record unemployment rate – but above all by the rise in commodity prices.
Vast and sparsely populated, Australia abounds with the ores, fuels and minerals that have supported decades of nearly continuous economic growth.
The country is a major exporter of iron ore, which hit a record high in 2021, and coal, which hit a record high soon after.
In March, iron ore prices more than doubled compared to the government’s initial forecast, as traders expect increased demand from China as its borders reopen.
Decades of efforts to diversify Australia’s economy away from resources extracted or pumped from the ground have achieved little.
Iron ore, coal and gas remain the country’s top three export commodities, even as countries around the world seek to decarbonize their economies.