The Federal Government is finding it hard to lift revenue, so the natural response would be to keep spending under control. And the latest figures show that this is precisely what is happening. Expenses in the full 12-month period to December (2015 calendar year) were $421.7 billion, down 0.7 per cent on a year ago. The last time that expenses fell over a 12-month period was almost a decade ago, in mid-2006.
While expenses are going backwards, rolling annual revenue is struggling to grow, up just 1.4 per cent in 2015 on the previous year. As a result, the annual Budget deficit is seemingly becalmed near $42 billion. The budget deficit is not abnormally high near 2.5 per cent of GDP, but there are few signs of it narrowing any time soon…
The underlying budget deficit for the twelve months to December 2015 stood at $42.0 billion. The rolling annual deficit fell to $37.87 billion for the year to June but has edged up to $39-42 billion over the past five months…
With commodity prices and the terms-of-trade tumbling, an ageing population, and the housing cycle nearing its end, don’t expect any turnaround in fortunes for the Budget.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
