Power bills help as budget shelves big-ticket spending

Treasurer Jim Chalmers will hand down a low-key fourth federal budget after ex-tropical cyclone Alfred blew an early election off course.

The pre-election budget on Tuesday night will contain fewer big-spending measures than in previous years but voters can still expect cost-of-living relief in the form of an extension of energy bill rebates.

THE BOTTOM LINE

* The budget will return to deficit in 2024/25 after two successive surpluses

* The mid-year budget review in December forecast an underlying cash balance $26.9 billion in the red, but most economists predict a slightly smaller deficits due to stronger-than-expected tax revenue

* Revenue upgrades will taper off in future years, while spending is set to increase, which should result in a worsening in the budget position in the three years following

* "Off budget" measures, which are included in the headline deficit, are expected to be closer to $100 billion over the four years in the budget period

* Dr Chalmers announced federal government debt will climb to $940 billion this financial year - a record high. This is $177 billion less than it was forecast to be before the 2022 election but the improvement has largely been driven by parameter improvements outside the government's control

* The share of debt to GDP is now expected to peak at 37 per cent of GDP, down from the 44.9 per cent ratio before the last election and well below levels of peer OECD economies such as the UK and the US

* The government has made $2.1 billion in savings and reprioritisations this budget, bringing the total amount of money found behind the budget couch this term to $95 billion

* Some $4.7 billion of those savings have come as a result of reducing external labour, such as consultants, in favour of extra public servants as the government brings more capability back in house

ECONOMIC OUTLOOK

* The budget will update forecasts to Australia's economy

* In the December budget update, GDP was expected to grow at 1.75 per cent in 2024/25 before eventually accelerating to 2.75 per cent in 2027/28, but that could be at risk because of downgrades to the global growth as a result of US trade tariffs

* The inflation forecast for 2024/25 is likely to be downgraded from the 2.75 per cent figure predicted in December, with annual CPI rising at 2.4 per cent throughout 2024, according to the Australian Bureau of Statistics

* Unemployment forecasts are expected to be lowered from 4.5 per cent to 4.25 per cent over the next three years and remain at that level, in line with estimates produced by the Reserve Bank

MEASURES ALREADY ANNOUNCED

* $8.5 billion over four years to expand bulk billing rates to 90 per cent

* $7.2 billion to upgrade the Bruce Highway in Queensland

* $2.8 billion in funding to Queensland schools

* $2 billion in extra funding to create a new rail hub at Sunshine in Melbourne's west as part of a future airport rail link

* $1.8 billion to extend rebates shaving $75 off energy bills for the final two quarters of 2025

* $1.2 billion in disaster recovery support for southeast Queensland and northern NSW communities hit by ex-tropical cyclone Alfred

* $1 billion to secure a future rail corridor from the new Western Sydney Airport to Macarthur and Leppington in Sydney's southwest

* $1 billion in existing defence funding brought forward to boost the nation's military capability

* $800 million for an extension to the Help to Buy shared equity scheme to increase income and price caps for homebuyers

* $689 million over four years to reduce the cap on PBS medicines from $31.60 to $25

* $644 million to open 50 new Medicare urgent care clinics nationally

* $125 million to upgrade the intersection of Donnybrook Road and Mitchell Street in Melbourne's outer north

* $95 million over four years in lost revenue from a freeze on the draught beer excise

* $16 billion or 20 per cent will be wiped from student HECS debt, but this spending will be squirrelled off budget so will not impact the underlying deficit