What happened
Australia's treasurer, Jim Chalmers, has indicated that the upcoming mid-year budget update will be tight, with little extra help for households struggling with soaring living costs. The government is facing billions of dollars in higher debt repayments due to rising borrowing costs, which will lead to more savings in the budget.
The treasurer has signaled that the budget will be tightened in an effort to rein in persistent inflation, which has climbed to 4 percent. The government has also ruled out reinstating the fuel excise cut introduced earlier in the year to help motorists deal with high prices.
The Reserve Bank of Australia has raised interest rates to 4.6 percent, the fourth rise of the year, in an effort to control inflation. The bank's former governor, Philip Lowe, has suggested that the government should run large budget surpluses and cut spending to take pressure off inflation.
The final budget outcome for 2025/26 was a $22.3 billion deficit, which was about $6 billion better than the figure projected in the May budget. However, higher government borrowing costs have hit the bottom line.
