Australia has forecast its first budget surplus in 15 years

Resource-rich Australia is forecasting its first budget surplus in 15 years, the country’s treasurer said on Tuesday, declaring a victory for the centre-left government, fueled by a year of raw materials.

“We now expect a surplus this year and a small deficit thereafter,” Jim Chalmers told the media, hours before releasing what was expected to be a surplus of A$4 billion (US$3.6 billion).

Mr Chalmers hailed the “biggest financial turnaround on record” as evidence of “responsible economic management” as his party seeks to define itself as a vigilant guardian of the public purse.

Labor came to power in May 2022 after almost a decade of Conservative government, which saw the state coffers battered by a 19-year-old bird flu epidemic, drastic tax cuts and an explosion in defense spending.

The Conservative government led by Scott Morrison promised a budget surplus in 2020, but has been unable to deliver due to the pandemic.

Australia last recorded a budget surplus in 2007, when Conservative John Howard was prime minister.

The projected surplus for the current fiscal year will be partly generated due to the increase in tax revenue – due to the record unemployment rate – and above all due to the rise in commodity prices.

Vast and sparsely populated, Australia is overflowing with minerals, fuels and minerals that have supported decades of uninterrupted economic growth.

The country is a leading exporter of iron ore, whose prices hit a record high in 2021, and coal, which hit a record soon after.

In March, iron ore prices more than doubled compared to the government’s initial forecast, as traders expect demand to pick up as China reopens its borders.

Decades of efforts to diversify Australia’s economy away from resources mined or pumped out of the ground have achieved little.

Iron ore, coal and gas remain the country’s top three exports, even as countries around the world try to decarbonize their economies.