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December 17, 2025
The 2025-26 Mid-Year Economic and Fiscal Outlook (MYEFO) released today confirms the Treasurer is pushing government spending up even further at a time when economists warn spending restraint is needed to prevent rate increases.
If rates rise in 2026, as the National Australia Bank, the Commonwealth Bank, the markets and many leading economists now predict, this government will have nobody to blame but itself.
The Albanese Government has increased real growth in spending from 3 percent per year at budget to 4.5 percent in MYEFO – twice the rate of economic growth Treasury is forecasting.
Last year, spending grew at nearly four times the rate of economic growth.
This financial year, the Treasurer has more than tripled last year’s deficit to $37 billion. While the policy decisions of the Albanese Government since coming to power have added $38 billion to this deficit – more than explaining the entirety of the deficit.
That means, under the policy settings of the Coalition government at the time of the 2022 election, the budget would be in surplus today.
For the second year in a row, Chalmers turned a Coalition surplus into a Labor deficit.
The Treasurer boasts about a $5-billion improvement in the bottom line since budget, but in that same time he has been the beneficiary of a $15-billion revenue windfall.
A full $9 billion of that windfall went straight back out the door in higher public spending than forecast at budget. That’s why spending is at its highest level in nearly 40 years outside of recession and is set to remain there for the next decade.
The Treasurer is also keen to boast about taking decisions to improve the bottom line by $2 billion over the forward estimates.
But what he doesn’t admit is that the Government’s decisions actually worsen the bottom line over the first two years, pumping yet more money into the economy at a time when inflation is rising and expected to remain above the RBA’s target range.
Chalmers is pressing even harder on the accelerator while RBA Governor Michele Bullock threatens to stamp on the brakes.
And Chalmers’ measly $2-billion saving comes after his decisions since coming to office worsened the bottom line by an extraordinary $110 billion. For that, he expects applause.
MYEFO confirms the Albanese Government’s plan is to keep the budget in deficit indefinitely, with the deficit remaining at 0.2 percent of GDP in a decade’s time.
This follows Chalmers dropping a return to surplus as an objective of his fiscal strategy upon coming to government – a goal every prior government maintained.
And the Government continues to fund its spending spree by raising taxes on Australian workers.
In MYEFO, Chalmers revealed he will collect an additional $17 billion in personal income taxes over the next four years, entirely wiping out the $17-billion tax cuts Labor took to the election.
And MYEFO confirms he plans to continue to raise personal income taxes every year for the next decade – to the tune of almost half a trillion dollars.
Only Jim Chalmers could call such a terrible set of numbers his best yet.
When Labor spends, you pay.
ENDS