Treasurer Jim Chalmers announced that the Australian budget has shifted from two consecutive surpluses in 2022-23 and 2023-24 to a deficit, marking the first in recent years, primarily due to increased tax revenue and commodity prices.

The latest financial results show a strong fiscal position with reduced deficits and progress in debt reduction, reflecting disciplined spending and revenue upgrades.

The government expects average real spending growth of 1.7% over the next seven years, up to 2028/29, while maintaining high levels of government spending at about 27% of GDP.

The improved fiscal outlook is partly due to higher-than-expected commodity prices, such as iron ore and coal, which were underestimated in previous forecasts.

A stronger job market, with employment rising nearly 12% and wages reaching record levels, has driven increased personal income tax collections, contributing to the revenue boost.

Approximately 70% of revenue upgrades over the past three years have been saved or allocated for future use.

The budget forecast for the 2024-25 financial year has significantly improved from an initial estimate of a $27.6 billion deficit to just under $10 billion, due to higher-than-expected revenue.

The Reserve Bank of Australia is expected to keep interest rates steady at 3.6%, amid recent inflation increases.

Treasurer Jim Chalmers credited the better fiscal outcome to a strong jobs market and increased take-home pay for workers.

The government expects average real spending growth of 1.7% through 2028/29, with ongoing high levels of government expenditure.

Inflation rose to 3% in August, affecting expectations for further reductions in mortgage rates by the Reserve Bank.

Australia's budget deficit for the last full financial year is projected at 0.4% of GDP, the lowest in recent years, reflecting improved fiscal health.

Despite the improvements, government spending remains high, close to pandemic levels, and tax revenue as a share of the economy is projected to stay above 23.5% over the next decade.