👉 Background: In May each year, the Federal Government delivers its budget forecast, which tells us how much money the government is collecting (mainly from taxes), and where it’s planning to spend it. This gives us an insight into how the government spending will impact our daily lives.

👉 What happened: The Treasurer dropped his third budget last night with the announcement of a forecasted $9.3 billion surplus. One of the biggest focuses of this budget was to address cost-of-living crisis in Australia. But not give away too much money at the risk of increasing inflation.

👉 What else: Part of the budget relief initiatives include:

• Modified stage-three tax cuts for low & middle-income earners
• $3 billion of HECS debt relief
• $11 billion towards building 1.2 million homes by 2030
• $8.5 billion for the health sector in the next 4 years

Despite the surplus this year, the Government warned of deficits for many years to come into future.

What's the key learning?

💡A budget surplus may be good news, but it doesn’t paint a full financial picture. The surplus highlights spending over a particular year, but doesn't show the government's overall financial position.

💡 At the moment, Australia has close to $1 trillion in government debt - a lot of which was racked up during the pandemic. To put that into perspective, the government currently spends $60 million a day on interest repayments on its debt. These are repayments that can't go towards other initiatives like healthcare or infrastructure.

💡Interestingly, Australia's debt levels pale in comparison to other countries. For context, Australia’s debt levels are sitting below 50% of GDP.

• The US, has almost $34 trillion USD in debt, which is around 121% of their GDP
  Japan, has $13 trillion of national debt, which is a whopping 255% of their GDP