Tuesday’s federal budget will include an updated economic forecast, with the treasurer, Jim Chalmers, saying predicted higher inflation will dampen wages growth.
The Albanese government will bank $10bn in savings from phase 1 of its much-telegraphed “rorts and waste” audit in Tuesday night’s budget, and shuffle another $11bn to better reflect its own policy priorities.
Projects on the chopping block include $475m for the Monash rail project in the electorate of Chisholm, a $50m.
Napoleon Road upgrade and an $110m Wellington Road upgrade in Alan Tudge’s electorate of Aston, a $260m commitment to remove the Glenferrie Road level crossing in the electorate of Kooyong, and a $7.5m commuter car park commitment in the Sydney seat of Banks.
The budget papers will also confirm a $3.6bn cut to external labour, government advertising, travel and legal expenses, and a $2bn cut to controversial discretionary grant funding by the Morrison government.
The shuffling of funds will include $6.5bn from re-profiling infrastructure projects to give priority to its own commitments and current constraints in construction capacity.
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In addition to the spending cuts and the reprioritisation of funds, Tuesday night’s budget will also include updated economic forecasts.
The treasurer, Jim Chalmers, has already confirmed inflation will be higher for longer largely due to stubbornly high energy prices, and the forecast for real GDP growth will also be revised down as protracted inflation and higher borrowing costs begin to weigh on consumer spending.
Treasury says growth will be onequarter of one percentage point lower in 2022-23 and a full percentage point lower in 2023-24 compared to estimates in the pre-election economic forecast.
The revisions mean real GDP growth is now forecast to be 3.25% for 2022-23 and 1.5% for 2023-24.
While Labor campaigned on boosting pay packets after years of flatlining wages, Chalmers on Sunday confirmed the persistence of inflation meant Australians would not see real wages growth until close to the next election.
The treasurer told the ABC on Sunday wages would move “substantially” once current price pressures moderated, but “they won’t cross over in our estimation or the Treasury’s estimation, until we get … inflation under control”.
The expenditure audit has been led by the finance minister Katy Gallagher. She said it had been a “line-by-line” process to begin the task of budget repair.
The Australian National Audit Office castigated the Morrison government’s management of several grants.
programs during the last parliamentary term.
“The former government used taxpayers’ money to cynically buy votes before elections by politicising grants funds and used the budget to land political deals with the Nationals in the Coalition party room – and that approach to spending ends in Labor’s first budget,” Gallagher said in a statement.
“The Albanese government is bringing back responsible budget management into government decision making,” the finance minister said.
“We take the job of budget repair seriously and these savings are the first step towards repairing the budget following a decade of damage done by the Coalition.”
Anticipating Labor’s move to can controversial projects in the budget, the shadow treasurer Angus Taylor said on Sunday investing in regional areas was important, and “done right” could take “pressure off inflation”.
“I just spent eight days cycling through 1,000km of regional New South Wales, and I’ve got to say, a lot of those regional infrastructure investments are paying back in spades right now,” Taylor told the ABC.
The shadow treasurer argued some of Labor’s infrastructure priorities were controversial, and nominated the suburban rail loop in Melbourne as an example.
Tuesday night’s budget will include a $2.2bn commitment to that project which the prime minister characterises as “a nation-building project for Victoria”.
Taylor said on Sunday the project had not been recommended by Infrastructure Australia, “was rejected by the auditor general in Victoria, has a cost benefit where for every dollar you spend you only get 51 cents back – projects like that don’t make sense”.
Labor on Tuesday night will also put flesh on the bones of its election commitment to fund 20,000 extra university places.
The budget will nominate 4,036 places in education, including 1,469 for early education teachers, 2,600 places in nursing, 2,275 in information technology, 2,740 in health professions like pharmacy and health science and 1,738 in engineering.
Five universities – Charles Darwin, the University of Wollongong, Curtin University Edith Cowan University and the University of Newcastle – will receive priority funding for the additional places.
The boost starts next year at a cost of $485.5m over the next four years.
Extra training places in technical colleges will also be funded on Tuesday night with the priorities the care workforce – including aged care, early education and care, health care, disability care – technology, construction, agriculture, hospitality and tourism, and defence.