Jim Chalmers budget update: Forced to downgrade mining exports by more than $100 billion

Labor will point the finger at China as it is forced to heavily downgrade mining export revenue,in a major pre-election budget blow for Treasurer Jim Chalmers.

In a grim move set to slam the Federal Government’s bottom line over the next four years, the Treasurer will use Wednesday’s Mid Year Economic and Fiscal Outlook to dramatically downgrade revenue forecasts.

Sluggish economic forecasts will also see Dr Chalmers wind back company tax receipt expectations by $8.5 billion to 2027-28, a blow to an already precarious revenue predictions.

The downgrade is the first time since the pandemic the Federal Government has been forced to scale back its company tax take.

While some have pointed the finger the Treasurer and Labor’s economic management, Dr Chalmers shifted the blame to a volatile global outlook, including a weak Chinese economy.

“Challenges in the Chinese economy will have flow on effects for our own budget and that will be clear in Treasury’s forecasts on Wednesday,” he said on Sunday.

“The global economy is uncertain, the global outlook is unsettling and that’s weighing heavily on our economy.

“Pressures on the budget are intensifying, global volatility is a big part of the story and you’ll see that in the mid-year update.

“We’re getting the budget in much better nick and building up Australia’s buffers to manage global uncertainty but we’re not immune from challenges coming at us from around the world.”

Both the mining industry and the Coalition have slammed Labor for its industrial relations changes, and the effect on the sector, including same job, same pay standards.

Shadow Treasurer Angus Taylor took aim at Labor over increased spending, saying the budget was “falling off a cliff”.

“This is a disastrous budget situation which reflects the government taking us on a pathway to economic ruin,” he said.

Speaking on Sky News on Sunday, Dr Chalmers was coy about the blow to the deficit projections, already sitting at a combined $120bn for the next four years.

Figures from the May budget forecast a slim surplus of $9.3bn for the 2024-25 financial year, followed by four consecutive deficits for ranging between $25bn and $42bn.

“You’ll see all the numbers on Wednesday. There hasn’t been slippage in every year,” he said.

“We’ve been able to do a little bit better in the near term, but there’s been some slippage for reasons that we’ve been upfront about.”

Despite speculation Anthony Albanese will call the election early to avoid handing down a growing deficit, Dr Chalmers confirmed he was still working towards delivering his next budget in March.

“Of course, I see the commentary, and I see that the pundits and all of the rest of it, speculating, as they always do it, understandably, about the timing of the election,” Dr Chalmers told Sky News.

“The timing of the election is up to Anthony from my point of view, and Katy Gallagher’s point of view.

“We’re certainly preparing for a budget in March, and that budget will be like the others.