Australia Sees Lower Gross Debt Peak, Small Upgrades in Budget

(Bloomberg) — Australia’s gross debt is set to peak at a lower level than anticipated when the Labor government took office, Tuesday’s budget will show, with Treasurer Jim Chalmers saying there’ll also be small revenue upgrades.

Most Read from Bloomberg

• They Built a Secret Apartment in a Mall. Now the Mall Is Dying.

• Why Did the Government Declare War on My Adorable Tiny Truck?

• Chicago Transit Faces ‘Doomsday Scenario,’ Regional Agency Says

• LA Faces $1 Billion Budget Hole, Warns of Thousands of Layoffs

• Libraries Warn They Could Be ‘Cut off at the Knees’ by DOGE

Chalmers is due to unveil his fiscal blueprint at Parliament House in Canberra at 7:30 pm local time when he delivers the traditional budget speech. Economists reckon it will show an underlying cash deficit in the 12 months through June 2026 of A$40 billion ($25.1 billion), slightly better than the A$46.9 billion predicted in Treasury’s mid-year review in December.

“We’ve got political uncertainty and division around the world,” Chalmers said in an interview with Bloomberg Television. “The budget is designed not just to respond to all of that uncertainty, but to make ourselves more resilient in the face of those external shocks.”

The treasurer has already pledged greater support for households to cope with higher power prices and healthcare costs ahead of the release of the budget. Australia is due to hold an election by May 17, with a formal announcement expected in the near future.

Chalmers is trying to win disgruntled voters back to Labor while aiming to keep the budget parameters prudent given global volatility from US trade policies. President Donald Trump is preparing a “Liberation Day” tariff announcement on April 2, unveiling reciprocal tariffs he sees as retribution for tariffs and other barriers from other countries, including potentially longtime US allies.

Subscribe to The Bloomberg Australia Podcast on Apple, Spotify, on YouTube, or wherever you listen.

Australia’s gross debt is forecast at A$940 billion in the current fiscal year, according to data provided by the government. It will peak at 37% of gross domestic product, or 7.9 percentage points lower than the previous government estimated in its 2022 pre-election budget outlook.

Economists reckon the budget is likely to show some windfall from historically low unemployment and higher key commodity prices, though the treasurer has played down those prospects.

Despite delivering back-to-back surpluses in his first two budgets, Chalmers is expected to reveal a deficit for the current fiscal year. The median estimate for the underlying cash deficit through June 30, 2025 is A$20 billion, slightly better than the A$26.9 billion shortfall forecast in Treasury’s mid-year review.