Surplus still on cards as slowing economy hits budget

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Falling commodity prices will affect revenue streams in the federal budget. (Darren Pateman/AAP PHOTOS)

WHAT IS KNOWN ABOUT THE FEDERAL BUDGET

The third federal budget under the Albanese government will be handed down on May 14 and several spending and policy announcements have already been made.

*A second surplus is still the goal in 2023/24, with the underlying cash balance for the 12 months to February showing a deficit of $6.1 billion

*The $22.1 billion surplus in 2022/23 was the first in 15 years

*The mid-year budget review had forecast a deficit of $1.1 billion for the 2023/24 fiscal year, narrowing from the $13.9 billion forecast in last year's budget

*Revenue upgrades in the past two budgets are unlikely to be as substantial because of falling commodity prices, including iron ore, and a weakening labour market

*Above target though moderating inflation remains the primary economic challenge for the budget, but the slowing domestic economy is also emerging as a larger priority

*Latest economic data points to ongoing tightness in the labour market and persistent price pressures, with the annual inflation moderation to 3.6 per cent in March from 4.1 per cent in December coming in above expectations

*A troubled Chinese property sector and geopolitical tensions in the Middle East and Europe are among the global challenges weighing on the budget.

*Treasury has downgraded its forecasts for key economies, including China, Japan and the United Kingdom

*Super is to be paid on government-funded paid parental leave, details will be in the budget

*Almost 500 "nuisance" tariffs are set to be scrapped that apply to a wide range of imported goods, details will be in the budget

*The reworked stage three reform package is considered to be broadly revenue neutral in the short term but will increase tax receipts by about $28 billion over the medium term

*Possible "targeted" financial support for small businesses and households

*Possible changes to how indexation across HECS-HELP student debts is calculated and potential financial help for university students on unpaid placements have been flagged as part of the Universities Accord higher education reforms

FUTURE MADE IN AUSTRALIA ACT

The Future Made in Australia Act involves deploying public funds to give viable zero carbon industries and projects a leg up so they can attract more private investment. More details are expected to be revealed in the budget but it encompasses a number of initiatives already, including:

*The $1 billion Solar SunShot program aims to bolster the nation's solar panel manufacturing capabilities

*The $2 billion Hydrogen Headstart program is intended to fund large-scale hydrogen production projects

*The $4 billion total available under the Critical Minerals Facility is designed to help complement commercial financing and help get critical mineral projects off the ground

*$400 million in loans has been announced for Australian company Alpha HPA to develop a high purity alumina facility in Gladstone, Queensland. Financing will in part come from the Critical Minerals Facility

*$185 million in loans have been conditionally approved for Renascor Resources to fast track the first stage of a purified graphite project in South Australia

*$330 million towards nine clean energy and emissions reduction projects has been allocated at heavy industrial sites nationwide via the $1.9 billion Powering the Regions Fund. This includes $52.9 million to upgrade the kiln at Cement Australia's Railton facility in Tasmania, and increase the use of alternative fuels such as waste to reduce emissions

*The government says its net zero industrial policy agenda has been underpinned by the National Skills agreement, the National Reconstruction Fund, the establishment of the Net Zero Economy Authority, and its push to rollout renewables and spur innovation

Australian Associated Press