Modest Budget Improvements Amid $150 Billion Deficits Highlight Risks to Australia's AAA Credit Rating

The Albanese government is eyeing a modest improvement to the budget, aiming to reduce the projected cumulative deficit from $151.6 billion to $150.5 billion. Despite this adjustment, concerns loom over the sustainability of Australia's financial health, with ratings agency S&P Global warning that the country could lose its coveted AAA credit rating if spending isn't curtailed or new revenue sources aren't found. Treasurer Jim Chalmers has defended the government's economic management, asserting it as a hallmark of their administration. In Monday's release of Election campaign costings, Chalmers and Finance Minister Katy Gallagher forecast a $1.1 billion budget enhancement over the next four years chiefly from cutting consultant usage and hiking visa application fees for foreign students. Specific measures include a significant saving of $6.4 billion by reducing reliance on external contractors and increasing application charges for student visas from $800 to $2000. However, critics argue that these measures come against a backdrop of increasing public spending and ambitious election promises totaling $7.2 billion. The implications of this budget strategy could sway Australia's price stability, as voiced by Opposition finance spokesperson Jane Hume, who cautioned that current spending levels are likely to exacerbate inflation rates. Notably, this financial strategy is examined under the scrutiny of S&P, which calls for rigorous fiscal discipline at all government levels as public expenditure reaches post-war highs. The agency highlights that unless election commitments are funded through either new revenues or extensive savings, the budget deficit could continue to widen, raising fears of a long-term fiscal crisis. Amid this, Opposition Leader Peter Dutton has pledged to present a budget with a stronger outcome and hinted at the Coalition's plans for a mini-budget focusing on economic repair in the future, pressing on the need for fiscal accountability.