Australia expects smaller revenue upgrade in budget due to falling commodity prices

By Thomson Reuters Mar 13, 2024 | 10:39 PM

By Alasdair Pal

SYDNEY (Reuters) – Australia will report a smaller revenue upgrade in its federal budget for the year ended June 30 than it posted the prior year due to falling commodity prices and a softening labour market, the country’s Treasurer said on Thursday.

Booming commodity prices saw major minerals exporter Australia upgrade its budget revenue by more than A$100 billion ($66.12 billion) in 2022-2023, a feat that is unlikely to be repeated this year, Treasurer Jim Chalmers said in a speech.

“The revenue upgrades will be smaller,” he said.

“In each of our first two budgets we benefited from more than A$100 billion in revenue upgrades. This year, we won’t see anything like that.

“In fact we are even looking at much less than the A$69 billion we booked in the latest mid-year budget update.”

Weaker commodity prices, in particular for major export iron ore, and rising unemployment were behind the change, said Chalmers. Australia’s jobless rate hit a two-year high in January.

Chalmers said the government was still aiming for a second consecutive budget surplus, although a greater portion of the revenue upgrades would be spent compared to last year, when roughly four-fifths was saved.

“We are still committed to banking as much as we can,” he said.

($1 = 1.5124 Australian dollars)

(Reporting by Alasdair Pal and Lewis Jackson in Sydney; Editing by Jamie Freed)