The Australian government announced on September 28 that the final fiscal deficit for the 2025-2026 fiscal year was AUD 22.3 billion, representing 0.8% of gross domestic product.
This result was AUD 6 billion lower than the AUD 28.3 billion forecast when the 2026-2027 budget was prepared in May of this year.
Higher-than-expected tax revenue and lower-than-expected government spending together improved the fiscal position.
Tax Revenue Up AUD 4.6 Billion, Spending Down AUD 1.4 Billion
Compared with the May budget forecast, tax revenue for the 2025-2026 fiscal year increased by AUD 4.6 billion. The Australian government said the main reason was higher-than-expected tax receipts from superannuation funds and investment income.
Chalmers stated that the revenue improvement did not come from wage taxes or mining taxes exceeding expectations; mining profits were in fact lower than previously forecast.
Government spending over the same period was AUD 1.4 billion less than the budget forecast. Finance Minister Katie Gallagher said that spending on programs including aged care, childcare, and pharmaceutical subsidies was below anticipated levels.
The changes on both the revenue and expenditure sides combined to reduce the final deficit by AUD 6 billion compared with the May forecast.
Deficit Below Forecast but Higher Than Previous Fiscal Year
This was the final result for the fiscal year ending at the end of June 2026. In the 2024-2025 fiscal year, Australia's fiscal deficit was approximately AUD 10 billion; the AUD 22.3 billion for 2025-2026, while lower than the budget forecast, was still about AUD 12.3 billion wider than the previous fiscal year.
The government also announced that total debt for the 2025-2026 fiscal year was AUD 10.6 billion less than the May budget estimate, representing 33.2% of the total economy.
Chalmers said the smaller deficit improved the debt situation but acknowledged that the fiscal position still faces long-term spending pressures.
Fiscal Data Released on the Eve of Central Bank Rate Decision
When the final fiscal result was released, Australia was still facing inflation pressures, and the central bank was set to make its next interest rate decision on September 29.
At a press conference that day, Chalmers attributed part of the current upward pressure on prices to the situation in the Middle East and fuel prices; opinions remain divided on the relationship between government spending and inflation.
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