Sarah-Jane Tasker: Why surplus celebrations won’t last

Four more sleeps until Treasurer Jim Chalmers delivers what is expected to be a little surplus gift in the Federal Budget.

With cost of living front of mind for many, Tuesday’s Budget will be delivered just a week after the RBA pushed interest rates higher again.

But it’s not just Australia’s rate hikes Chalmers needs to be wary of. The US Federal Reserve lifted its rates again on Wednesday and Fed chair Jerome Powell warned a “mini” recession could be on the cards.

So while the Albanese Government celebrates the surplus next week they shouldn’t be popping the champagne — because by the time we’re counting down the sleeps until Christmas the economy could be dealing with a recession in the US and the flow-on impact of that.

Plus, the surplus will likely be a one-off and the Budget will forecast ongoing deficits.

Chalmers doesn’t have an easy task. He needs to provide financial support to those doing it tough but also ensure the Budget still has some firepower left in it to deal with future economic shocks.

Deloitte Access Economics partner Stephen Smith says the Treasurer can’t do “too much” to relieve cost-of-living pressures, as he risks putting additional upward pressure on inflation and encouraging the RBA to keep hiking rates.

“Do too little and low-income households, and the economy more generally, will be left teetering, especially after the 11th interest rate increase over the past year,” he says.

But get the balance right and Chalmers will be regarded as one of our top treasurers.