Australia has reported a final budget deficit of A$22.3 billion ($15.65 billion) for the 2025-26 financial year, beating expectations. The result came in about A$6 billion below the A$28.3 billion forecast in the May budget.

Treasurer Jim Chalmers released the figures on Monday. Treasury said lower welfare payments and stronger tax receipts, including from businesses and superannuation funds, improved the bottom line.

“Despite this very welcome improvement in the budget, we know that pressures are intensifying rather than easing,” Chalmers said at a press conference.

The deficit was still far larger than the A$10 billion shortfall recorded in 2024-25, which had ended two years of surpluses. Deficits are projected to continue for another decade.

The Reserve Bank of Australia is widely expected to raise interest rates for a fourth time on Tuesday, taking the cash rate to 4.6 percent, a 15-year high. Inflation remains above the bank’s two to three percent target band, and the labour market has stayed resilient.

Why it matters: the stronger budget offers little comfort to households bracing for another rate rise and rising mortgage costs.