Budget deficit to halve this financial year but spending pressures mean boost will be short-lived

The Australian treasurer, Jim Chalmers, is preparing to deliver his first budget, and the first of Anthony Albanese’s Labor government. Photograph: Lukas Coch/AAP

Soaring commodity prices and a strong labour market will deliver a $42bn boost to the budget bottom line over the next four years, with the deficit more than halving this financial year.

However, the improvement – to be revealed in Jim Chalmers’ first budget on Tuesday night – will be short-lived, with worse-than-expected deficits by the end of the forward estimates as a result of growing spending pressures.