Those who cite Gough Whitlam as among Australia’s greatest Prime Ministers have a response when his critics point to his economic failures, such as inflation zooming to 18 per cent after wages growth topped 25 per cent on government encouragement and public spending doubled within three years.

The Whitlam fans retort that his administration was responsible enough to post Budget surpluses over its two completed fiscal years.

It’s true. Whitlam recorded Budget surpluses of 1.9 per cent and 0.3 per cent of GDP in 1973-74 and 1974-75 respectively (and ushered in a surplus of 0.7 per cent of output in 1972-73 from December that fiscal year). It could be argued that on fiscal management, Whitlam outshone Malcolm Fraser, who only achieved one surplus in six full fiscal years.

But Whitlam was lucky. One of the four big booms in Australia’s terms of trade camouflaged how he had lost control of government finances. The ratio of export to import prices charged Australia’s way when Whitlam was in power after Middle East tensions flared. Opec upped oil prices and bad weather boosted food prices. (The other export bonanzas were during the Korean War, the 1960s mining boom, and China’s recent industrialisation.)

Prime Minister Anthony Albanese is enjoying the same good fortune. Export receipts have surged. Over 2022, for instance, the Reserve Bank of Australia’s index of commodity prices rallied 16.6 per cent in Australian dollars. The increase is mainly due to Russia’s invasion of Ukraine in February last year – the index jumped 21 per cent the following two months. Our miners are showering taxes on Canberra.

The federal government’s finances are improving in three other ways too. One is that non-mining companies are also paying more in taxes because the export-infused economy is expanding. Banks, especially, are paying more taxes because rising interest rates allow them to widen net-interest margins.

Another budget boost is a workforce at full employment means more in income tax and fewer people on jobless benefits. The final way is inflation-driven bracket creep. Workers gaining pay rises to compensate for inflation at 7 per cent are entering higher tax brackets.

Offset against these gains is that the federal government faces steeper costs. These include rising debt repayments, higher welfare and pension payments indexed to inflation, and the greater cost of goods and services purchased. But, on balance, Canberra’s revenue is topping expectations; vice versa for costs.

The latest update shows the federal ‘underlying cash’ deficit narrowed to $11.2 billion in the year to March, a huge improvement on what was expected for 2022-23.

In October, Treasurer Jim Chalmers forecast of a Budget deficit more than three times higher at $36.9 billion for this fiscal year. In March 2022, Treasurer Josh Frydenberg predicted a budget hole more than seven times higher at $78 billion, about 3.4 per cent of GDP.

Most newsworthy is that Canberra could post a budget surplus this financial year. Already, Canberra’s ‘net operating balance’ is in surplus – by $400 million in the year to March. This outcome is based on accruals rather than cash accounting is an achievement because it shows the government didn’t need to borrow over the 12 months to cover operating activities. It hints that Chalmers, when delivering the Budget on May 9, could forecast a cash surplus for this financial year.

While the fiscal position for 2022-23 won’t be settled until September, any surplus would be the first since 2007-08 – when Peter Costello and Wayne Swan shared the treasurer role. Chalmers is thus poised to accomplish what Swan could never repeat and what Frydenberg pretended he achieved (but never did).

The political capital gained by Albanese and Chalmers, if they achieve a surplus, would, at first glance, be massive, especially after the pandemic extravagance inflated the deficit to 6.5 per cent of GDP in 2020-21. The pair could parade as the responsible managers who, by saving the revenue bonanza, have eased inflationary pressures. They could credibly claim the RBA might then not need to raise the cash rate by as much.

But another political calculation might thwart the first Budget surplus in 15 years. The problem is that any surplus would almost certainly be one-off. The federal government confronts too many cost pressures. The Treasury projects Budget deficits of about 2 per cent of GDP in coming fiscal years because many government payments are growing faster than the economy. More federal spending on aged, disability, and health care plus more money for the military and a higher interest bill are expected to strain Canberra’s coffers. The government will be under pressure to make spending cuts elsewhere and raise taxes.

Given the outlook for deficits, announcing a budget surplus might confuse Australians as to why they must suffer fewer services and higher taxes. Another problem is that a surplus now could make the public think the future deficits were the fault of Albanese and Chalmers. The best political outcome might be a narrow deficit rather than a surplus, even a small one.

Unless the budget outcome is a large surplus (unlikely), Chalmers could ensure a deficit because governments can juggle budget numbers at the margin by bringing forward or postponing spending, or by changing the profile of large investments.

While it could be hard to gauge whether or not such massaging has occurred, don’t assume missing a surplus would upset the Prime Minister and the Treasurer. A sense of crisis around the Budget might be a better political asset.

To be sure, it’s a fair question as to whether any politician would pass up guaranteed accolades. The flipside to that is there’s no guarantee of a surplus this fiscal year. Consumer confidence tumbled to depths classed as ‘deep pessimism’ as RBA rate increases piled up. The 10 rate increases so far could induce a recession that harms government finances in no time.

That’s double-edged, however, for Labor. If Albanese and Chalmers forfeit a surplus and the pessimists are right that a recession is coming, they might face the worst-possible outcome reputation-wise. They could end up with a Whitlam-like legacy for economic incompetence without his only arguable economic achievement of budget surpluses.