Chalmers chooses 'hard road of reform' in Budget

Treasurer Jim Chalmers has unveiled the Federal Budget, delivering a deficit for 2026/27 of $31.5 billion, as the government prioritises reform over relief.

The 2025/26 deficit came in at $28.3 billion, a far cry from the $36.8 billion that had been projected.

"The [government] is delivering a stronger and more sustainable Budget with smaller deficits, less debt and net policy decisions that improve the bottom line," Chalmers said.

"Responsible economic management is a defining feature of this government, and this Budget is our most responsible yet.

"Strong fiscal discipline is even more important at a time of heightened global uncertainty, and that's exactly what we're delivering."

Additionally, compared to the MYEFO, the Budget is $44.9 billion stronger than forecast.

"It is more than a quarter of a trillion dollars better than what the Coalition left us," Chalmers said.

"This is possible because of our responsible approach to finding savings and reprioritisations, spending restraint and banking all revenue upgrades."

Debt is down a further $18 billion in 2026-27 than forecast in the mid-year, saving the government $70 billion in interest costs over the decade.

The peak in gross debt is now forecast to be 35.8% of GDP, 1.2 percentage points below the mid-year update.

"Gross debt as a percentage of GDP remains below what we inherited in every single year," Chalmers said.

"We've found a further $63.8 billion in savings and reprioritisations, taking the total since coming to government to almost $180 billion."

Chalmers added net policy decisions are positive for the second consecutive update, with net decisions accounting for provisions totalling $26.1 billion over the forward estimates.

"For the first time on record, consecutive updates have returned every single dollar of revenue upgrade to the bottom line. This means the government has returned 76% of revenue upgrades," Chalmers said.

"Looking further ahead, the budget bottom line is better and debt is lower in every year of the medium term."

Chalmers said the revised forward estimates for the Budget are a result of "disciplined decisions" the government has made to "rebuild fiscal buffers".

Chalmers acknowledged global uncertainty has hit the economy, however Treasury are projecting the Budget will return to balance over the medium-term.

"Australia is not immune from uncertainty and volatility in the global economy as a result of conflict in the Middle East," Chalmers said.

"We are well placed and well prepared to confront these challenges with faster growth at the end of last year than any major advanced economy, low unemployment, solid wage growth and stronger public finances than most of the developed world."