Key facts
- Australia's final budget deficit for the year to June 2026 was A$22.3 billion.
- The deficit represents approximately 0.8% of gross domestic product.
- This figure is an improvement from the A$28.3 billion deficit forecast earlier this year.
- The previous financial year (2024/25) saw a deficit of A$10 billion.
- Lower welfare program payments and stronger tax receipts contributed to the improved position.
- Treasurer Jim Chalmers noted intensifying pressures despite the budget improvement.
Australia reported a final budget deficit of A$22.3 billion ($15.65 billion) for the financial year ending June 2026, an improvement from earlier expectations, according to the Treasury. The deficit represents approximately 0.8% of gross domestic product, down from a previous forecast of A$28.3 billion. This figure follows a deficit of A$10 billion in the 2024/25 financial year, which ended two years of budget surpluses. The improved fiscal position was attributed to lower government spending on welfare programs and stronger-than-anticipated tax receipts from businesses and pension funds. Treasurer Jim Chalmers acknowledged the welcome improvement but cautioned that pressures are intensifying. The government had previously forecast a wider deficit of A$31.5 billion for the 2026/27 financial year, a projection made before a global bond rout increased borrowing costs. The Reserve Bank of Australia is widely anticipated to raise interest rates to 4.6% on Tuesday to combat persistent inflation, while the labor market remains resilient with an unemployment rate of 4.6%.