Australian Federal Budget Deficit Worsens as Economic Pressures Mount

Treasurer Jim Chalmers confirms mid-year update will reveal a $33.5 billion deficit, driven by declining commodity prices, inflation, and global uncertainty.

• The upcoming December budget update is expected to show a $33.5 billion deficit for the current financial year, $5.2 billion worse than May's forecast.
• Deloitte Access Economics attributes the deficit to falling commodity prices, which could reduce company tax receipts by $18 billion over four years, partially offset by $8.2 billion in higher income tax revenues from inflation.
• Spending pressures include $1.3 billion for domestic violence programs, $930 million for aged care, and $900 million for a productivity fund, with inflation further adding to costs.
• The slowdown in China's economy and potential tariff policies under U.S. President-elect Donald Trump are seen as key risks to Australia's fiscal outlook.
• Critics point to a lack of substantial economic reform over two decades, with concerns about declining productivity, real incomes, and economic competitiveness.

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